The first search for the decay K^+ -> pi^+ pi^0 nu nubar has been performed with the E787 detector at BNL. Based on zero events observed in the kinematical search region defined by 90 MeV/c < P_{pi^+} < 188 MeV/c and 135 MeV < E_{pi^0} < 180 MeV, an upper limit B(K^+ -> pi^+ pi^0 nu nubar) < 4.3 x 10^{-5} at 90% confidence level is established.
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