An improved convergent and economical method has been developed for the synthesis of erlotinib, a 4-anilinoquinazoline and an EGFR-tyrosine kinase inhibitor for treatment of non-small-cell lung cancer. The final two steps for the formation of this 4-anilinoquinazoline from suitable 2-aminobenzonitrile intermediate and 3-ethynylaniline were modified and were performed in a simple one-pot reaction. The ring-closing mechanism for the formation of erlotinib from the suitable formamidine intermediate and 3-ethynylaniline was investigated and determined to proceed via the formation of phenyl benzamidine intermediate rather than involving Dimroth rearrangement reported earlier. The new benzamidine intermediate was isolated for the first time and characterized.