The clinical use of trastuzumab (Herceptin), a humanized antibody against the HER2 growth factor receptor, has improved survival in patients with breast tumors with ERBB2 amplification and/or over-expression. However, most patients with advanced ERBB2 amplified breast cancers whose tumors initially respond to trastuzumab develop resistance to the drug, leading to tumor progression. To identify factors responsible for acquired resistance to trastuzumab, gene expression profiling was performed on subclones of an ERBB2 amplified breast cancer cell line, BT474, which had acquired resistance to trastuzumab. The most overexpressed gene in these subclones was PPP1R1B, encoding the DARPP-32 phosphatase inhibitor. Western analysis revealed that only the truncated isoform of the DARPP-32 protein, t-Darpp, was overexpressed in the trastuzumab resistant cells. Using gene silencing experiments, we confirmed that t-Darpp over-expression was required for trastuzumab resistance in these cells. Furthermore, transfecting t-Darpp in parental BT-474 cells conferred resistance to trastuzumab, suggesting that t-Darpp expression was sufficient for trastuzumab resistance. We also found that t-Darpp over-expression was associated with Akt activation and that the T75 residue in t-Darpp was required for both Akt activation and trastuzumab resistance. Finally, we found that full-length DARPP-32 and t-Darpp are expressed in a majority of primary breast tumors. Over-expression of full-length DARPP-32 can also confer resistance to trastuzumab and, moreover, is associated with a poor prognostic value in breast cancers. Thus, t-Darpp and DARPP-32 expression are novel prognostic and predictive biomarkers in breast cancer.