Gab1-SHP2 association is required for Erk mitogen-activated protein kinase activation by several growth factors. Gab1-SHP2 interaction activates SHP2. However, an activated SHP2 still needs to associate with Gab1 to mediate Erk activation. It was unclear whether SHP2 is required to dephosphorylate a negative phosphorylation site on Gab1 or whether SHP2 needs the Gab1 pleckstrin homology (PH) domain to target it to the plasma membrane. We found that expression of a fusion protein consisting of the Gab1 PH domain and an active SHP2 (Gab1PH-SHP2DeltaN) induced constitutive Mek1 and Erk2 activation. Linking the active SHP2DeltaN to the PDK1 PH domain or the FRS2beta myristoylation sequence also induced Mek1 activation. Mek1 activation by Gab1PH-SHP2DeltaN was inhibited by an Src inhibitor and by Csk. Significantly, Gab1PH-SHP2DeltaN induced Src activation. Gab1PH-SHP2DeltaN expression activated Ras, and the Gab1PH-SHP2DeltaN-induced Mek1 activation was blocked by RasN17. These findings suggest that Gab1PH-SHP2DeltaN activated a signaling step upstream of Src and Ras. The SHP2 tyrosine phosphatase activity is essential for the function of the fusion protein. Together, these data show that the Gab1 sequence, besides the PH domain and SHP2 binding sites, is dispensable for Erk activation, suggesting that the primary role of Gab1 association with an activated SHP2 is to target it to the membrane.