Background: In the TCHL trial (NCT01485926) 78 women with HER2-positive breast cancer (BC) underwent neo-adjuvant treatment with either TCH (Docetaxel, Carboplatin, Trastuzumab) or TCHL (TCH + Lapatinib) therapy. Of the 78 patients, 24 consented to an optional on-treatment biopsy 20 days after 1 cycle of therapy. We analysed the impact of tumour infiltrating lymphocytes (TILs) on pathological complete response (pCR) and also determined the impact of TCH/TCHL therapy on immune cell modulation after 20 days of treatment. Methods: We assessed TIL and stromal lymphocytes (SL) counts using immunohistochemical staining with Haemotoxalyin+Eosin, AE1/AE3 and CD45 in formalin fixed paraffin embedded (FFPE) baseline biopsy samples and in fresh frozen (FF) biopsies taken 20-days post cycle 1 (Day-20) of TCH/TCHL. RNA libraries were generated, using the Truseq mRNA library prep kit on the Neoprep platform and sequenced on the NextSeq 500. We measured the transcriptomic profile of 8 pre and on-treatment sample pairs and then used the Microenvironment Cell Populations (MCP)-counter method to measure the abundance of 10 immune cell populations (T cells, CD8 T cells, cytotoxic lymphocytes, NK cells, B lineage, myeloid dendritic cells, neutrophils, endothelial cells and fibroblasts). Results: We found that higher baseline levels of TILs (p = 0.045) but not SL were associated with an increased likelihood of a patient achieving a pCR to TCH/L based therapy. We found in day 20 on-treatment biopsies of women that subsequently went onto have a pCR that levels of SLs but not TILs were significantly higher (p = 0.049) than in those women who did not have a pCR. Finally we found significant increases in the level of monocytes (p = 0.05) and fibroblasts (p = 0.01), but not other immune cell populations, in the day 20 on-treatment biopsies in comparison with the mutated pre-treatment biopsies. Conclusions: In our study baseline TILs but not SLs have a predictive role in the likelihood of a patient achieving a pCR. We also found that TCHL based therapy significantly altered both monocytes and fibroblasts, indicating a possible role for these immune subtypes in response to TCHL therapy.