In vascular smooth muscle cells, IGF-I stimulates SHPS-1/SHP2/Src complex formation which is required for IGF-I-stimulated cell proliferation. Using SHP2/Src silencing and a Pyk2/Y402F mutant, we showed that Pyk2 was also recruited to the SHPS-1 complex. Pyk2 recruitment to SHPS-1 is mediated via the interaction of Pyk2 Tyr402 and the Src in response to IGF-I. Following Src/Pyk2 association, Src phosphorylates Pyk2 on Tyr881 providing a binding site for Grb2. Cells expressing Pyk2/Y881F showed decreased Grb2 recruitment to SHPS-1 and impaired Shc/Grb2 association. This change led to reduced Erk1/2 (MAP kinase) activation and cell proliferation in response to IGF-I. Our results show that, following its recruitment to the SHPS-1 signaling complex, Pyk2 localizes Grb2 in close proximity to Shc thereby facilitating Shc/Grb2 association which leads to Erk1/2 activation in response to IGF-I. Thus, Pyk2 recruitment to SHPS-1 plays an important role in regulating the IGF-I-stimulated mitogenic response.