154 Background: Trastuzumab (Herceptin) resistance remains a clinical challenge but the mechanism is not well understood. Recently, studies have identified a subset of Her2+ breast cancer called basal HER2 that expresses basal genes. We investigated the effect of basal gene expression on Herceptin response in HER2+ breast cancer cell lines and on prognosis in HER2+ breast cancer patients. Methods: Non-basal (BT474, SKBR3) and basal (HCC1569, HCC1954, JIMT-1) HER2+ cell lines were chosen based on basal cytokeratin expression. Cell proliferation was assessed after treatment with vehicle, Herceptin (H), Paclitaxel (P), H+P, Akt Inhibitor (AI), and H+AI. HER2 signaling was examined using immunoblotting of p-Akt and p-ERK. Because breast cancer stem cells (BCSC) are linked to basal breast tumors and treatment resistance, we assessed BCSC activity using mammosphere formation and aldehyde dehydrogenase (ALDH) positivity. Immunohistochemical staining of HER2+ breast cancers for basal markers CK5/6, CK14, and EGFR was correlated with clinicopathologic features and survival in 88 patients with Stage 1-3 HER2+ breast cancer treated with Herceptin. Results: Basal HER2 cells were resistant to Herceptin compared to non-basal HER2 cells but this resistance was overcome by Akt inhibition. Immunoblotting showed that non-basal HER2 cells had decreased p-Akt after Herceptin treatment which was not seen in basal HER2 cells. There was no difference in p-ERK levels after Herceptin therapy in all cell lines. Basal HER2 cells had increased mammosphere formation and ALDH positivity suggesting higher stem cell activity compared to non-basal HER2 cells. Of the HER2+ patients, 33/88 (37.5%) expressed at least one basal marker. Basal Her2 tumors were associated with higher grade (p = 0.04) and more ER/PR negativity (p < 0.01). CK14 expression correlated with worse overall survival by log-rank test (p = 0.02), while EGFR showed a similar trend (p = 0.06). Conclusions: Basal HER2 breast cancer cell lines have Herceptin resistance which may be due to constitutively active Akt signaling and increased stem cell activity. Clinically, basal marker expression predicts Herceptin resistance and worse outcomes in HER2+ breast cancer patients.