Inclusion Criteria:

• HER2 status must be prospectively, centrally tested and be HER2-positive based on central laboratory assay results
• Histologically or cytologically confirmed invasive breast cancer
• Prior treatment for breast cancer in the adjuvant, unresectable, locally advanced, or metastatic setting must include both: a taxane, alone or in combination with another agent, and trastuzumab alone or in combination with another agent
• Documented progression of incurable, unresectable, locally advanced or metastatic breast cancer, defined by the investigator
• Measurable and/or nonmeasurable disease; patients with central nervous system (CNS)-only disease are excluded
• Cardiac ejection fraction >= 50% by either ECHO or MUGA
• Eastern Cooperative Oncology Group (ECOG) performance status of 0 or 1
• For women of childbearing potential and men with partners of childbearing potential, agreement to use a highly effective, non-hormonal form of contraception; contraception use should continue for the duration of the study treatment and for at least 6 months after the last dose of study treatment

Exclusion Criteria:

• History of treatment with T-DM1
• Prior treatment with lapatinib or capecitabine
• Peripheral neuropathy of Grade >= 3 per National Cancer Institute Common Terminology Criteria for Adverse Events (NCI CTCAE), Version 3.0
• History of other malignancy within the last 5 years, except for appropriately treated carcinoma in situ of the cervix, non-melanoma skin carcinoma, Stage 1 uterine cancer, synchronous or previously diagnosed HER2-positive breast cancer, or cancers with a similar curative outcome as those mentioned above
• History of receiving any anti-cancer drug/biologic or investigational treatment within 21 days prior to randomization except hormone therapy, which can be given up to 7 days prior to randomization; recovery of treatment-related toxicity consistent with other eligibility criteria
• History of radiation therapy within 14 days of randomization
• Brain metastases that are untreated, symptomatic, or require therapy to control symptoms, as well as any history of radiation, surgery, or other therapy, including steroids, to control symptoms from brain metastases within 2 months (60 days) of randomization
• History of symptomatic congestive heart failure (CHF) or serious cardiac arrhythmia requiring treatment
• History of myocardial infarction or unstable angina within 6 months of randomization
• Current dyspnea at rest due to complications of advanced malignancy or current requirement for continuous oxygen therapy
• Current severe, uncontrolled systemic disease (e.g., clinically significant cardiovascular, pulmonary, or metabolic disease)
• Pregnancy or lactation
• Current known active infection with HIV, hepatitis B virus, or hepatitis C virus
• Presence of conditions that could affect gastrointestinal absorption: malabsorption syndrome, resection of the small bowel or stomach, and ulcerative colitis
• History of intolerance (such as Grade 3-4 infusion reaction) to trastuzumab
• Known hypersensitivity to 5-fluorouracil or known dihydropyrimidine dehydrogenase deficiency
• Current treatment with sorivudine or its chemically related analogs, such as brivudine