Diverse cellular processes are regulated by tyrosyl phosphorylation, which is controlled by protein-tyrosine kinases (PTKs) and protein-tyrosine phosphatases (PTPs). De-regulated tyrosyl phosphorylation, evoked by gain-of-function mutations and/or over-expression of PTKs, contributes to the pathogenesis of many cancers and other human diseases. PTPs, because they oppose the action of PTKs, had been considered to be prime suspects for potential tumor suppressor genes. Surprisingly, few, if any, tumor suppressor PTPs have been identified. However, the Src homology-2 domain-containing phosphatase Shp2 (encoded by PTPN11) is a bona fide proto-oncogene. Germline mutations in PTPN11 cause Noonan and LEOPARD syndromes, whereas somatic PTPN11 mutations occur in several types of hematologic malignancies, most notably juvenile myelomonocytic leukemia and, more rarely, in solid tumors. Shp2 also is an essential component in several other oncogene signaling pathways. Elucidation of the events underlying Shp2-evoked transformation may provide new insights into oncogenic mechanisms and novel targets for anti-cancer therapy.