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ERBB2/HER2 belongs to the EGFR-family of receptor tyrosine kinases and its overexpression can promote tumor progression. Breast cancer patients with ERBB2 amplifications are currently treated with lapatinib, a small-molecule kinase inhibitor that specifically blocks EGFR/ERBB2 signaling. Here, we show that hypoxia, via HIF-1, induces resistance to lapatinib-mediated effects in ERBB2-expressing mammary epithelial and ERBB2-positive breast cancer cells. Lapatinib-mediated growth inhibition and apoptosis in three-dimensional (3D) cultures are decreased under hypoxic conditions. Hypoxia can maintain activation of signaling pathways downstream from ERBB2 including AKT and ERK in the presence of lapatinib. HIF-1 is both required and sufficient to induce lapatinib resistance as overexpression of stable HIF-1 in ERBB2-expressing cells blocks lapatinib-mediated effects and maintains ERBB2-downstream signaling under normoxic conditions. Under hypoxia, activation of ERK signaling is required for lapatinib resistance as treatment with MEK inhibitor trametinib reverses hypoxia-mediated lapatinib resistance. HIF-1 can bypass the lapatinib-treated inhibition of the ERK pathway via inhibition of the dual-specificity phosphatase 2 (DUSP2). Indeed, overexpression of DUSP2 in ErbB2-positve breast cancer cells reverses hypoxia-mediated lapatinib resistance. Thus, our results provide rationale for therapeutic evaluation of the treatment of hypoxic ERBB2 expressing breast tumors with a combination of lapatinib and MEK inhibitors.