Approximately 75% of failed pregnancies are considered to be due to embryo implantation failure or defects. Nevertheless, the explicit signaling mechanisms governing this process have not yet been elucidated. Here, we found that conditional deletion of the Shp2 gene in mouse uterine stromal cells deferred embryo implantation and inhibited the decidualization of stromal cells, which led to embryonic developmental delay and to the death of numerous embryos mid-gestation, ultimately reducing female fertility. The absence of Shp2 in stromal cells increased the proliferation of endometrial epithelial cells, thereby disturbing endometrial epithelial remodeling. However, Shp2 deletion impaired the proliferation and polyploidization of stromal cells, which are distinct characteristics of decidualization. In human endometrial stromal cells (hESCs), Shp2 expression gradually increased during the decidualization process. Knockout of Shp2 blocked the decidual differentiation of hESCs, while Shp2 overexpression had the opposite effect. Shp2 knockout inhibited the proliferation of hESCs during decidualization. Whole gene expression profiling analysis of hESCs during the decidualization process showed that Shp2 deficiency disrupted many signaling transduction pathways and gene expression. Analyses of hESCs and mouse uterine tissues confirmed that the signaling pathways extracellular regulated protein kinases (ERK), protein kinase B (AKT), signal transducer and activator of transcription 3 (STAT3) and their downstream transcription factors CCAAT/enhancer binding protein β (C/EBPβ) and Forkhead box transcription factor O1 (FOXO-1) were involved in the Shp2 regulation of decidualization. In summary, these results demonstrate that Shp2 plays a crucial role in stromal decidualization by mediating and coordinating multiple signaling pathways in uterine stromal cells. Our discovery possibly provides a novel key regulator of embryo implantation and novel therapeutic target for pregnancy failure.