Src homology region 2 domain-containing phosphatase 1 (SHP-1) has been implicated as a potential cancer therapeutic target by its negative regulation of immune cell activation and the activity of the SHP-1 inhibitor sodium stibogluconate that induced IFN-gamma(+) cells for anti-tumor action. To develop more potent SHP-1-targeted anti-cancer agents, inhibitory leads were identified from a library of 34,000 drug-like compounds. Among the leads and active at low nM for recombinant SHP-1, tyrosine phosphatase inhibitor-1 (TPI-1) selectively increased SHP-1 phospho-substrates (pLck-pY394, pZap70, and pSlp76) in Jurkat T cells but had little effects on pERK1/2 or pLck-pY505 regulated by phosphatases SHP-2 or CD45, respectively. TPI-1 induced mouse splenic-IFN-gamma(+) cells in vitro, approximately 58-fold more effective than sodium stibogluconate, and increased mouse splenic-pLck-pY394 and -IFN-gamma(+) cells in vivo. TPI-1 also induced IFN-gamma(+) cells in human peripheral blood in vitro. Significantly, TPI-1 inhibited ( approximately 83%, p < 0.002) the growth of B16 melanoma tumors in mice at a tolerated oral dose in a T cell-dependent manner but had little effects on B16 cell growth in culture. TPI-1 also inhibited B16 tumor growth and prolonged tumor mice survival as a tolerated s.c. agent. TPI-1 analogs were identified with improved activities in IFN-gamma(+) cell induction and in anti-tumor actions. In particular, analog TPI-1a4 as a tolerated oral agent completely inhibited the growth of K1735 melanoma tumors and was more effective than the parental lead against MC-26 colon cancer tumors in mice. These results designate TPI-1 and the analogs as novel SHP-1 inhibitors with anti-tumor activity likely via an immune mechanism, supporting SHP-1 as a novel target for cancer treatment.