Proteinase-activated receptor-2 (PAR2), a new member of family of the G protein-coupled receptors, is activated by proteolytic cleavage of its extracellular amino terminus, a mechanism similar to that used by the thrombin receptor. It has been suggested that PAR2 has a potential role in the late phases of the acute inflammatory response and in tissue repair and/or skin-related disorders. Here we demonstrate that the agonist peptide (SLIGRL) stimulated c-fos-mediated mitogenic activation and tyrosine phosphorylation of cellular proteins. One of the tyrosine-phosphorylated proteins was identified as an Src homology-2 domain-containing protein-tyrosine phosphatase, SHP2. The stimulatory effect of the agonist peptide on early gene transcription was markedly blocked by pertussis toxin treatment whereas the induced tyrosine phosphorylation of SHP2 was completely abolished by the drug. More importantly, while expression of wild-type SHP2 enhanced the agonist-stimulatory mitogenic activity, overexpression of a catalytically inactive mutant of SHP2 strongly suppressed the stimulatory effect of the agonist peptide on both early gene transcription and DNA synthesis. These results suggest that SHP2 acts as a positive regulator linked to the PAR2-mediated mitogenic pathway coupled to a pertussis toxin-sensitive heterotrimeric G protein. Demonstration of SHP2 as a positive mediator in a G protein-coupled, receptor-mediated signaling adds to our understanding of the function of both SHP2 and PAR2 in the signaling pathway.