The Ras-Raf-MEK-extracellular signal-regulated kinase (ERK) pathway participates in the control of many fundamental cellular processes including proliferation, survival, and differentiation. The pathway is deregulated in up to 30% of human cancers, often due to mutations in Ras and the B-Raf isoform. Raf-1 and B-Raf can form heterodimers, and this may be important for cellular transformation. Here, we have analyzed the biochemical and biological properties of Raf-1/B-Raf heterodimers. Isolated Raf-1/B-Raf heterodimers possessed a highly increased kinase activity compared to the respective homodimers or monomers. Heterodimers between wild-type Raf-1 and B-Raf mutants with low or no kinase activity still displayed elevated kinase activity, as did heterodimers between wild-type B-Raf and kinase-negative Raf-1. In contrast, heterodimers containing both kinase-negative Raf-1 and kinase-negative B-Raf were completely inactive, suggesting that the kinase activity of the heterodimer specifically originates from Raf and that either kinase-competent Raf isoform is sufficient to confer high catalytic activity to the heterodimer. In cell lines, Raf-1/B-Raf heterodimers were found at low levels. Heterodimerization was enhanced by 14-3-3 proteins and by mitogens independently of ERK. However, ERK-induced phosphorylation of B-Raf on T753 promoted the disassembly of Raf heterodimers, and the mutation of T753 prolonged growth factor-induced heterodimerization. The B-Raf T753A mutant enhanced differentiation of PC12 cells, which was previously shown to be dependent on sustained ERK signaling. Fine mapping of the interaction sites by peptide arrays suggested a complex mode of interaction involving multiple contact sites with a main Raf-1 binding site in B-Raf encompassing T753. In summary, our data suggest that Raf-1/B-Raf heterodimerization occurs as part of the physiological activation process and that the heterodimer has distinct biochemical properties that may be important for the regulation of some biological processes.