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In this multicenter, open-label, randomized phase II investigator-sponsored neoadjuvant trial with funding provided by Sanofi and GlaxoSmithKline (TRIO-US B07, Clinical Trials NCT00769470), participants with early-stage HER2-positive breast cancer ( N  = 128) were recruited from 13 United States oncology centers throughout the Translational Research in Oncology network. Participants were randomized to receive trastuzumab (T; N  = 34), lapatinib (L; N  = 36), or both (TL; N  = 58) as HER2-targeted therapy, with each participant given one cycle of this designated anti-HER2 therapy alone followed by six cycles of standard combination chemotherapy with the same anti-HER2 therapy. The primary objective was to estimate the rate of pathologic complete response (pCR) at the time of surgery in each of the three arms. In the intent-to-treat population, we observed similar pCR rates between T (47%, 95% confidence interval [CI] 30–65%) and TL (52%, 95% CI 38–65%), and a lower pCR rate with L (25%, 95% CI 13–43%). In the T arm, 100% of participants completed all protocol-specified treatment prior to surgery, as compared to 69% in the L arm and 74% in the TL arm. Tumor or tumor bed tissue was collected whenever possible pre-treatment ( N  = 110), after one cycle of HER2-targeted therapy alone ( N  = 89), and at time of surgery ( N  = 59). Higher-level amplification of HER2 and hormone receptor (HR)-negative status were associated with a higher pCR rate. Large shifts in the tumor, immune, and stromal gene expression occurred after one cycle of HER2-targeted therapy. In contrast to pCR rates, the L-containing arms exhibited greater proliferation reduction than T at this timepoint. Immune expression signatures increased in all arms after one cycle of HER2-targeted therapy, decreasing again by the time of surgery. Our results inform approaches to early assessment of sensitivity to anti-HER2 therapy and shed light on the role of the immune microenvironment in response to HER2-targeted agents. HER2+ breast cancer patients can often develop resistance to trastuzumab and therefore potential combination therapies need to be explored. Here, the authors report the results of a multi-center randomized phase II clinical trial evaluating the pathological and molecular responses associated with trastuzumab and/or lapatinib in combination with chemotherapy in HER2+ breast cancer patients.