The previously demonstrated functional and physical interaction of the SH2 domain protein-tyrosine phosphatase SHP-1 with the epidermal growth factor (EGF) receptor (Tomic, S., Greiser, U., Lammers, R., Kharitonenkov, A., Imyanitov, E., Ullrich, A., and Böhmer, F. D. (1995) J. Biol. Chem. 270, 21277-21284) was investigated with respect to the involved structural elements of SHP-1. Various mutants of SHP-1 were transiently expressed in 293 or COS-7 cells and analyzed for their capacity to associate with immobilized autophosphorylated EGF receptor in vitro and to dephosphorylate coexpressed EGF receptor in intact cells. Inactivating point mutation of the C-terminal SH2 domain reduced the association weakly, point mutation of the N-terminal SH2 domain reduced association strongly and the respective double mutation abolished association totally. The capacity of SHP-1 to dephosphorylate coexpressed EGF receptor was impaired by all point mutations. Truncation of the N-terminal or of both SH2 domains strongly reduced or abolished association, respectively, but the truncated SHP-1 derivatives still dephosphorylated coexpressed EGF receptor effectively. Various chimeric protein-tyrosine phosphatases constructed from SHP-1 and the closely homologous SHP-2 dephosphorylated the EGF receptor when they contained the catalytic domain of SHP-1. As native SHP-2, the chimera lacked activity toward the receptor when they contained the catalytic domain of SHP-2, despite their capacity to associate with the receptor and to dephosphorylate an artificial phosphopeptide. We conclude that the differential interaction of SHP-1 and SHP-2 with the EGF receptor is due to the specificity of the respective catalytic domains rather than to the specificity of the SH2 domains. Functional interaction of native SHP-1 with the EGF receptor requires association mediated by both SH2 domains.