SHP1 and SHP2 represent a subfamily of non-transmembrane proteintyrosine phosphatases (PTPs) that contain two tandem SH2 (src homology 2) domains. SHPs have two N-terminal SH2 domains (N-SH2 and C-SH2), a classic PTP domain and a C-terminal tail harboring two tyrosyl phosphorylation sites which are phosphorylated differentially by receptor and non-receptor protein-tyrosine kinases (PTKs). Whereas Shp2 is expressed ubiquitously, SHP1 is primarily expressed in hematopoietic cells and behaves as a key regulator controlling intracellular phosphotyrosine levels in lymphocytes. SHP SH2 domains (particularly the N-SH2) also regulate PTP activity. Basal SHP activity is low, but addition of a phosphotyrosyl peptide that binds the N-SH2 (Tyr–P peptide ligand) markedly stimulates catalysis. SHP1 is implicated in signaling from receptor tyrosine kinases (RTKs), cytokine receptors, chemokine receptors and integrins. SHP1– deficient bone marrow macrophages are hyperadherent to β1– and β2-integrin ligands. Decreased SHP1 level causes abnormal Tlymphocyte proliferation and induces various types of leukemias. Introduction of the SHP1 gene back into a leukemia cell line and a prostate cancer cell line demonstrated the tumor suppressor function of SHP1.