Deregulated HER2 is a target of many approved cancer drugs. We analyzed 111,176 patient tumors and identified recurrent mutations in HER2 transmembrane domain (TMD) and juxtamembrane domain (JMD) that include G660D, R678Q, E693K, and Q709L. Using a saturation mutagenesis screen and testing of patient-derived mutations we found several activating TMD and JMD mutations. Structural modeling and analysis showed that the TMD/JMD mutations function by improving the active dimer interface or stabilizing an activating conformation. Further, we found that HER2 G660D employed asymmetric kinase dimerization for activation and signaling. Importantly, anti-HER2 antibodies and small-molecule kinase inhibitors blocked the activity of TMD/JMD mutants. Consistent with this, a G660D germline mutant lung cancer patient showed remarkable clinical response to HER2 blockade. Display omitted •Recurrent HER2 transmembrane/juxtamembrane domain (TMD/JMD) mutations identified•TMD/JMD-activating mutations identified in multiple cancers•Transmembrane HER2 mutant homodimerizes leading to allosteric activation of kinase•TMD/JMD mutants respond to HER2 targeted therapy Pahuja et al. show that recurrent HER2 transmembrane domain and juxtamembrane domain mutations enhance HER2 activity by improving the active dimer interface or stabilizing an activating conformation. Importantly, HER2 inhibiting antibodies and small molecules can block the activity of these mutants.