The tyrosine phosphatase SHP-2 has been implicated in a variety of signaling pathways, including those mediated by neurotrophins in neurons. To examine the role of SHP-2 in the development of sympathetic neurons, we inhibited the function of SHP-2 in transgenic mice by overexpressing a catalytically inactive SHP-2 mutant under the control of the human dopamine β-hydroxylase promoter. Expression of mutant SHP-2 did not influence the survival, axon initiation, or pathfinding abilities of the sympathetic neurons. However, mutant SHP-2 expression resulted in an overproduction of sympathetic fibers in sympathetic target organs. This was due to interference with SHP-2 function, as overexpression of wild type SHP-2 had no such effect. In vitro, NGF-dependent neurite growth was inhibited in neurons expressing mutant SHP-2 but not in those expressing wild type SHP-2. Mutant (but not wt) SHP-2 expression also inhibited NGF-stimulated ERK activation. The NGF-dependent survival pathway was less affected than the neurite growth pathway. Our results suggest that NGF-regulated axon growth signals, and to a lesser degree survival signals, are mediated through a SHP-2-dependent pathway in sympathetic neurons. The increased sympathetic innervation in target tissues of neurons expressing mutant SHP-2 may result from interference with normal “stop” signals dependent on signaling by gradients of NGF.