The Src homology 2-containing tyrosine phosphatase, Shp-2, is a crucial enzyme that mediates intracellular signaling and is implicated in cell proliferation and differentiation. Here we investigated the involvement of the Shp-2 tyrosine phosphatase in determining the downstream signaling pathways initiated by the Ret oncogene, carrying either the cysteine 634 to tyrosine or the methionine 918 to threonine substitutions. These mutations convert the receptor tyrosine kinase, Ret, into a dominant transforming protein and induce constitutive activation of its intrinsic tyrosine kinase activity leading to congenital and sporadic cancers in neuroendocrine organs. Using the PC12, rat pheochromocytoma cell line, as model system, we show that Shp-2 mediates immediate-early gene expression if induced by either of the mutant alleles. Furthermore, we show that Shp-2 activity is required for Ret^M918T-induced Akt activation. The results indicate that Shp-2 is a downstream mediator of the mutated receptors Ret^C634Y and Ret^M918T, thus suggesting that it may act as a limiting factor in Ret-associated endocrine tumors, in the neoplastic syndromes multiple endocrine neoplasia types 2A and 2B.