The Src homology phosphotyrosyl phosphatase 2 (SHP2) is an essential transducer of mitogenic and cell survival signaling in the epidermal growth factor receptor (EGFR) signaling pathway. However, the role of SHP2 in aberrant EGFR and human EGFR2 (HER2) signaling and cancer, particularly in breast cancer, has not been investigated. Here, we report that SHP2 is required for mitogenic and cell survival signaling and for sustaining the transformation phenotypes of breast cancer cell lines that overexpress EGFR and HER2. Inhibition of SHP2 suppressed EGF-induced activation of the Ras-ERK and the phosphatidylinositol 3 kinase-Akt signaling pathways, abolished anchorage-independent growth, induced epithelial cell morphology and led to reversion to a normal breast epithelial phenotype. Furthermore, inhibition of SHP2 led to upregulation of E-cadherin (epithelial marker) and downregulation of fibronectin and vimentin (mesenchymal markers). These results indicate that SHP2 promotes breast cancer cell phenotypes by positively modulating mitogenic and cell survival signaling, by suppressing E-cadherin expression which is known to play a tumor suppressor role and by sustaining the mesenchymal state as evidenced by the positive impact on fibronectin and vimentin expression. Therefore, SHP2 promotes epithelial to mesenchymal transition, whereas its inhibition leads to mesenchymal to epithelial transition. On the basis of these premises, we propose that interference with SHP2 function might help treat breast cancer.