The G-CSF receptor transduces signals that regulate the proliferation, differentiation, and survival of myeloid cells. A subgroup of patients with severe congenital neutropenia (SCN) has been shown to harbor mutations in the G-CSF receptor gene that resulted in the truncation of the receptor's carboxyl-terminal region. SCN patients with mutations in the G-CSF receptor gene are predisposed to acute myeloid leukemia. The truncated receptors from SCN/acute myeloid leukemia patients mediate augmented and sustained activation of Stat transcription factors and are accordingly hyperactive in inducing cell proliferation and survival but are defective in inducing differentiation. Little is known about the molecular mechanisms underlying the negative role of the receptor's carboxyl terminus in the regulation of Stat activation and cell proliferation/survival. In this study, we provide evidence that SH2-containing phosphatase-1 (SHP-1) plays a negative regulatory role in G-CSF-induced Stat activation. We also demonstrate that the carboxyl terminus of the G-CSF receptor is required for SHP-1 down-regulation of Stat activation induced by G-CSF. Our results indicate further that this regulation is highly specific because SHP-1 has no effect on the activation of Akt and extracellular signal-related kinase1/2 by G-CSF. The data together strongly suggest that SHP-1 may represent an important mechanism by which the carboxyl terminus of the G-CSF receptor down-regulates G-CSF-induced Stat activation and thereby inhibits cell proliferation and survival in response to G-CSF.