The epidermal growth factor receptor (EGFR) plays crucial roles in regulating cell proliferation, migration, and differentiation. Because its aberrant activity is implicated in a variety of cancers, EGFR is an intensely pursued drug target. Whereas activation of the EGFR intracellular kinase domain is promoted by receptor dimerization upon binding of ligands to the extracellular domains, inactive EGFR can exist as both monomers and dimers, which suggests that the mechanism regulating EGFR activity may be subtle. Our molecular dynamics simulations of EGFR suggest that, in ligand-bound dimers, the extracellular domains assume conformations favoring dimerization of the transmembrane helices near their N termini, dimerization of the juxtamembrane segments, and formation of asymmetric (active) kinase dimers. In ligand-free dimers, the extracellular domains assume different conformations that favor C-terminal dimerization of the transmembrane helices, dissociation of juxtamembrane segments, and formation of symmetric (inactive) kinase dimers. Electrostatic interactions of EGFR’s intracellular module with the membrane are critical in maintaining this coupling. Thus, molecular dynamics simulations provide a detailed description of molecular mechanisms involved in activation and inhibition of EGFR. Our conclusions are supported by extensive experimental observations.