The members of the epidermal growth factor receptor (EGFR) kinase family are important players in breast morphogenesis and cancer. EGFR2/HER2 and EGFR expression have a prognostic value in certain subtypes of breast cancer such as HER2-amplified, basal-like and luminal type B. Many clinically approved small molecular inhibitors and monoclonal antibodies have been designed to target HER2, EGFR or both. There is, however, still limited knowledge on how the two receptors are expressed in normal breast epithelium, what effects they have on cellular differentiation and how they participate in neoplastic transformation. D492 is a breast epithelial cell line with stem cell properties that can undergo epithelial to mesenchyme transition (EMT), generate luminal- and myoepithelial cells and form complex branching structures in three-dimensional (3D) culture. Here, we show that overexpression of HER2 in D492 (D492HER2) resulted in EMT, loss of contact growth inhibition and increased oncogenic potential in vivo. HER2 overexpression, furthermore, inhibited endogenous EGFR expression. Re-introducing EGFR in D492HER2 (D492HER2/EGFR) partially reversed the mesenchymal state of the cells, as an epithelial phenotype reappeared both in 3D cultures and in vivo. The D492HER2/EGFR xenografts grow slower than the D492HER2 tumors, while overexpression of EGFR alone (D492EGFR) was not oncogenic in vivo. Consistent with the EGFR-mediated epithelial phenotype, overexpression of EGFR drove the cells toward a myoepithelial phenotype in 3D culture. The effect of two clinically approved anti-HER2 and EGFR therapies, trastuzumab and cetuximab, was tested alone and in combination on D492HER2 xenografts. While trastuzumab had a growth inhibitory effect compared with untreated control, the effect of cetuximab was limited. When administered in combination, the growth inhibitory effect of trastuzumab was less pronounced. Collectively, our data indicate that in HER2-overexpressing D492 cells, EGFR can behave as a tumor suppressor, by pushing the cells towards epithelial differentiation.