Platelet endothelial cell adhesion molecule-1 (PECAM-1) has been implicated in endothelial cell motility during angiogenesis. Although there is evidence that SHP-2 plays a role in PECAM-1-dependent cell motility, the molecular basis of the activity of SHP-2 in this process has not been defined. To investigate the requirement of SHP-2 in PECAM-1-dependent cell motility, studies were done in which various constructs of SHP-2 were expressed in cell transfectants expressing PECAM-1. We observed that the levels of PECAM-1 tyrosine phosphorylation and SHP-2 association with PECAM-1 were significantly increased in cells expressing a phosphatase-inactive SHP-2 mutant, suggesting that the level of PECAM-1 tyrosine phosphorylation, and thus SHP-2 binding are regulated in part by bound, catalytically active SHP-2. We subsequently found that expression of PECAM-1 stimulated wound-induced migration and the formation of filopodia (a morphological feature of motile cells). These activities were associated with increased mitogen-activated protein kinase (MAPK) activation and the dephosphorylation of paxillin (an event implicated in the activation of MAPK). The phosphatase-inactive SHP-2 mutant, however, suppressed these PECAM-1-dependent phenomena, whereas the activity of PECAM-1 expressing cells was not altered by expression of wild-type SHP-2 or SHP-2 in which the scaffold/adaptor function had been disabled. Pharmacological inhibition of SHP-2 phosphatase activity also suppressed PECAM-1-dependent motility. Furthermore, PECAM-1 expression also stimulates tube formation, but none of the SHP-2 constructs affected this process. These findings therefore suggest a model for the involvement of SHP-2 in PECAM-1-dependent motility in which SHP-2, recruited by its interaction with PECAM-1, targets paxillin to ultimately activate the MAPK pathway and downstream events required for cell motility.