Tyrosyl phosphorylation, which is controlled by protein-tyrosine kinases (PTKs) and protein-tyrosine phosphatases (PTPs), regulates numerous cellular processes. Altered expression and/or mutations in PTKs are linked to many forms of cancer, yet until recently little was known about the roles of PTPs in normal cells or in cancer. Earlier work established that a member of the PTP superfamily, PTEN, is an important tumor suppressor gene. We now know that at least one other PTP, the SH2 domain-containing phosphatase Shp2, is a bona fide oncogene that is mutated in several types of leukemia and hyperactivated by other mechanisms in some solid tumors. Understanding how Shp2 and other PTPs contribute to oncogenesis should provide new insights into pathogenesis and might suggest new targets for anti-neoplastic drugs.