The epidermal growth factor receptor (EGFR) belongs to the ErbB family of receptor tyrosine kinases, and controls a diverse set of cellular responses relevant to development and tumorigenesis. ErbB activation is a complex process involving receptor-ligand binding, receptor dimerization, phosphorylation, and trafficking (internalization, recycling and degradation), which together dictate the spatio-temporal distribution of active receptors within the cell. The ability to predict this distribution, and elucidation of the factors regulating it, would help to establish a mechanistic link between ErbB expression levels and the cellular response. Towards this end, we constructed mathematical models to determine the contributions of receptor dimerization and phosphorylation to EGFR activation, and to examine the dependence of these processes on sub-cellular location. We collected experimental datasets for EGFR activation dynamics in human mammary epithelial cells, with the specific goal of model parameterization, and used the data to estimate parameters for several alternate models. Model-based analysis indicated that: (1) signal termination via receptor dephosphorylation in late endosomes, prior to degradation, is an important component of the response, (2) less than 40% of the receptors in the cell are phosphorylated at any given time, even at saturating ligand doses, and (3) receptor phosphorylation kinetics at the cell surface and early endosomes are comparable. We validated the last finding by measuring the EGFR dephosphorylation rates at various times following ligand addition both in whole cells and in endosomes using ELISAs and fluorescent imaging. Overall, our results provide important information on how EGFR phosphorylation levels are regulated within cells. This study demonstrates that an iterative cycle of experiments and modeling can be used to gain mechanistic insight regarding complex cell signaling networks.