SHP-2 is a cytoplasmic protein tyrosine phosphatase (PTP) that contains two Src homology 2 (SH2) domains. Although PTPs are generally considered to be negative regulators on the basis of their ability to oppose the effects of protein tyrosine kinases, SHP-2 is unusual in that it promotes the activation of the Ras-MAPK signaling pathway by receptors for various growth factors and cytokines. The molecular basis for the activation of SHP-2 is also unique: In the basal state, the NH(2)-terminal SH2 domain of SHP-2 interacts with the PTP domain, resulting in autoinhibition of PTP activity; the binding of SHP-2 via its SH2 domains to tyrosine-phosphorylated growth factor receptors or docking proteins, however, results in disruption of this intramolecular interaction, leading to exposure of the PTP domain and catalytic activation. Indeed, SHP-2 proteins with artificial mutations in the NH(2)-terminal SH2 domain have been shown to act as dominant active mutants in vitro. Such activating mutations of PTPN11 (human SHP-2 gene) were subsequently identified in individuals with Noonan syndrome, a human developmental disorder that is sometimes associated with juvenile myelomonocytic leukemia. Furthermore, somatic mutations of PTPN11 were found to be associated with pediatric leukemia. SHP-2 is also thought to participate in the development of other malignant disorders, but in a manner independent of such activating mutations. Biochemical and functional studies of SHP-2 and genetic analysis of PTPN11 in human disorders have thus converged to provide new insight into the pathogenesis of cancer as well as potential new targets for cancer treatment.