The Src homology 2 (SH2)-containing protein tyrosine phosphatase 1, SHP- 1, is highly expressed in all hematopoietic cells as well as in many non- hematopoietic cells, particularly in some malignant epithelial cell lines. In hematopoietic cells, SHP-1 negatively regulates multiple cytokine receptor pathways. The precise function and the targets of SHP-1 in non-hematopoietic cells, however, are largely unknown. Here we demonstrate that SHP-1 associates with both the tyrosine-phosphorylated platelet-derived growth factor (PDGF) receptor and the p85 subunit of phosphatidylinositol 3-kinase in MCF-7 and TRMP cells. Through the use of mutant PDGF receptors and performing peptide competition for immunoprecipitation, it was determined that SHP-1 independently associates with the PDGF receptor and p85 and that its N-terminal SH2 domain is directly responsible for the interactions. Overexpression of SHP-1 in TRMP cells transfected with the PDGF receptor markedly inhibited PDGF-induced c-fos promoter activation, whereas the expression of three catalytically inactive SHP-1 mutants increased the c-fos promoter activation in response to PDGF stimulation. These results indicate that SHP-1 might negatively regulate PDGF receptor-mediated signaling in these cells. Identification of the association of SHP-1 with the PDGF receptor and p85 in MCF-7 and TRMP cells furthers our understanding of the function of SHP-1 in non-hematopoietic cells.