Mutations in the Src homology 2 (SH2)-containing protein-tyrosine phosphatase Shp2 (PTPN11) underlie half of the cases of the autosomal dominant genetic disorder Noonan syndrome, and somatic Shp2 mutations are found in several hematologic and solid malignancies. Earlier studies of small numbers of mutants suggested that disease-associated mutations cause constitutive (SH2 binding-independent) activation and that cancer-associated mutants are more active than those associated with Noonan syndrome. We have characterized a larger panel of Shp2 mutants and find that this "activity-centric" model cannot explain the behaviors of all pathogenic Shp2 mutations. Instead, enzymatic, structural, and mathematical modeling analyses show that these mutants can affect basal activation, SH2 domain-phosphopeptide affinity, and/or substrate specificity to varying degrees. Furthermore, there is no absolute correlation between the mutants' extents of basal activation and the diseases they induce. We propose that activated mutants of Shp2 modulate signaling from specific stimuli to a subset of effectors and provide a theoretical framework for understanding the complex relationship between Shp2 activation, intracellular signaling, and pathology.