Often considered to be a “dead” kinase, erbB3 is implicated in escape from erbB-targeted cancer therapies. Here, heregulin stimulation is shown to markedly upregulate kinase activity in erbB3 immunoprecipitates. Intact, activated erbB3 phosphorylates tyrosine sites in an exogenous peptide substrate, and this activity is abolished by mutagenesis of lysine 723 in the catalytic domain. Enhanced erbB3 kinase activity is linked to heterointeractions with catalytically active erbB2, since it is largely blocked in cells pretreated with lapatinib or pertuzumab. erbB2 activation of erbB3 is not dependent on equal surface levels of these receptors, since it occurs even in erbB3-transfected CHO cells with disproportionally small amounts of erbB2. We tested a model in which transient erbB3/erbB2 heterointeractions set the stage for erbB3 homodimers to be signaling competent. erbB3 homo- and heterodimerization events were captured in real time on live cells using single-particle tracking of quantum dot probes bound to ligand or hemagglutinin tags on recombinant receptors.