HER2, a well established oncogenic member of EGFR family, is among the most intensely investigated kinase drug targets. In contrast to hotspot mutations of EGFR, few mutations of HER2 locate in activation loop within kinase domain. We previously reported the molecular mechanism underlying hyper kinase activity of HER2(H878Y), a mutation located in activation loop. However, its tumorigenicity in vivo and relevant therapeutics remain to be determined. Here, we report for the first time that HER2(H878Y) was tumorigenic in vivo in lung adenocarcinoma transgenic mouse model. Induced expression of HER2(H878Y) in lung epithelial compartments resulted in formation of poorly differentiated lung adenocarcinoma with bronchioloalveolar carcinoma (BAC) features. Strikingly, we found that these tumors depended on continuous expression of HER2(H878Y) for maintenance. Typical HER2 downstream signaling mediators, including PLC gamma 1, STAT5 and AKT, were hyperactivated in HER2(H878Y) driven lung tumors. More importantly, administration of HKI-272, a tyrosine kinase inhibitor (TKI), efficiently shrank HER2(H878Y) driven tumors in transgenic mouse model. Moreover, we found that combinational treatment with HKI272 and mTOR inhibitor, Rapamycin, showed a superior cytotoxicity to H878Y mutant transformed cells and enhanced activity to elicit apoptosis and inhibit growth in situ in tumorous area. Our work therefore showed that HER2(H878Y) mutant was a reasonable drug target. Hence, our work supported the assessment of HKI-272/rapamycin treatment in clinical trials.