Mutations of the tumor suppressor E-cadherin and overexpression of the receptor tyrosine kinase epidermal growth factor receptor (EGFR) are among the most frequent genetic alterations associated with diffuse-type gastric carcinoma. Accumulating evidence suggests a functional relationship between E-cadherin and EGFR that regulates both proteins. We report that somatic mutation of E-cadherin is associated with increased activation of EGFR followed by enhanced recruitment of the downstream acting signaling components growth factor receptor binding protein 2 and Shc, and activation of Ras. Reduced complex formation of mutant E-cadherin - with an in frame deletion of exon 8 in the extracellular domain resulting in reduced adhesion and increased motility - with EGFR was observed compared with wild-type E-cadherin. We conclude that reduced binding of mutant E-cadherin to EGFR in a multicomponent complex or reduced stability of the complex may enhance EGFR surface motility, thereby facilitating EGFR dimerization and activation. Furthermore, reduced surface localization due to enhanced internalization of mutant E-cadherin compared with the wild-type protein was observed. The internalization of EGFR was decreased in response to epidermal growth factor stimulation in cells expressing mutant E-cadherin, suggesting that mutation of E-cadherin also influences the endocytosis of EGFR. Moreover, we show increased activation of EGFR in gastric carcinoma samples with mutant E-cadherin lacking exons 8 or 9. In summary, we describe activation of EGFR by mutant E-cadherin as a novel mechanism in tumor cells that explains the enhanced motility of tumor cells in the presence of an extracellular mutation of E-cadherin.