The disclosure provided herein identifies and characterizes the domain in HER3 receptor that interacts with heregulin ligand. Typical embodiments of the invention disclosed herein include HER3 variant polypeptides having amino acid sequences which differ from the native HER3 polypeptide sequence and which have altered affinities for heregulin. Also disclosed herein are methods and materials for identifying compounds that bind to the heregulin binding domain in HER3 as well as methods and materials for modulating the interaction between HER3 and heregulin.