Shp-2, an src homology (SH) two-containing phosphotyrosine phosphatase, appears to be involved in cytoplasmic signaling downstream of a variety of cell surface receptors. It also plays an important role in the control of cell spreading, migration, and cytoskeletal architecture. In our study, abrogation of SHP-2 catalytic activity with a'dominant-negative mutant (SHP-2C > S) displayed an increased number of focal adhesion, high expression of E-cadhenrin and phosphorylation of the focal adhesion kinase (FAK). Interestingly, the cells expressing SHP-2C > S showed reduced IL-1beta-stimulated chemotaxis compared with either mock- or SHP-2 wild type-transfected cells. We also found that SHP-2-GFP-transfected cell lines did not express E-cadherin nearly and produced high level of the matrix metalloproteinase MMP-9 in the supernatants. The loss of E-cadherin-mediated adhesion and the increase of MMP-9-induced migration had been shown to play an important role in the transition of epithelial tumors from a benign to an invasive state. These findings have raised the possibility that SHP-2 can promote the cancer cell to invasion the distant tissues. To determine whether SHP-2 promotes invasion and metastasis, we transfected MCF-7 breast cancer cell lines with SHP-2-GFP, SHP-2C > S-GFP and analyzed the effects of the SHP-2 on cell migration, invasion, and metastasis. In vitro, SHP-2-GFP-transfected cells migrated more efficiently, showed an increased invasion of Matrigel, and adhered less efficiently to monolayers of fibroblast cells. When injected into the abdominal cavity of nude mice, SHP-2-GFP-transfected cells metastasized widely to the lung, kidney, but MCF-7 with SHP-2C > S-GFP was not observed in the these organs. These results demonstrate that SHP-2 promotes invasion and metastasis of MCF-7 with the loss of E-cadherin, the dephosphorylation of FAK and the secretion of MMP-9 induced by IL-1beta.