Protein-tyrosine-phosphatase SHPTP2 (Syp/PTP-1D/PTP2C) is the homologue of the Drosophila corkscrew (csw) gene product, which transmits positive signals from receptor tyrosine kinases. Likewise, SHPTP2 has been implicated in positive signaling from platelet-derived growth factor receptor beta (PDGFR). Upon PDGF stimulation, SHPTP2 binds to the PDGFR and becomes tyrosine-phosphorylated. We have identified tyrosine-542 (pY542TNI) as the major in vivo site of SHPTP2 tyrosine phosphorylation. The pY542TNI sequence conforms to the consensus binding site for the SH2 domain of Grb2, which, by association with Sos1, couples some growth factor receptors to Ras. Following PDGF stimulation, Grb2 binds tyrosine-phosphorylated SHPTP2. Moreover, a mutant PDGFR lacking its SHPTP2 binding site displays markedly reduced Grb2 binding. These data indicate that phosphorylation of SHPTP2 couples Grb2 to PDGFR in vivo, providing a mechanism for Ras activation by PDGFR and for positive signaling via SHPTP2 and Csw.