The epidermal growth factor receptor (EGFR) family has been implicated in several cancers, including breast, and its members have become the target of novel cancer therapies. In this report, we show a novel link between erlotinib, a potent EGFR inhibitor, DNA damage, and homology-directed recombinational repair (HDR) in human breast cancer cells. Erlotinib suppresses HDR. This is not secondary to erlotinib-mediated changes in cell cycle and is associated with increased γ-H2AX foci, which is an in situ marker of chromosomal double-strand breaks. Both Rad51 and BRCA1 are essential components of the HDR machinery. Consistent with decreased HDR in erlotinib-treated cells, erlotinib also attenuates DNA damage-induced Rad51 foci and results in cytoplasmic retention of BRCA1. As BRCA1 is a shuttling protein and its nuclear function of promoting HDR is controlled by its subcellular localization, we further show that targeted translocation of BRCA1 to the cytoplasm enhances erlotinib sensitivity. These findings suggest a novel mechanism of action of erlotinib through its effects on the BRCA1/HDR pathway. Furthermore, BRCA1/HDR status may be an innovative avenue to enhance the sensitivity of cancer cells to erlotinib. ©2008 American Association for Cancer Research.