Our previous studies have shown that activation of a related adhesion focal tyrosine kinase (RAFTK) (also known as Pyk2) is required for dexamethasone (Dex)-induced apoptosis in multiple myeloma (MM) cells and that human interleukin-6 (IL-6), a known growth and survival factor for MM cells, blocks both RAFTK activation and apoptosis induced by Dex. However, the mechanism whereby IL-6 inhibits Dex-induced apoptosis is undefined. In this study, we demonstrate that protein-tyrosine phosphatase SHP2 mediates this protective effect. We show that IL-6 triggers selective activation of SHP2 and its association with RAFTK in Dex-treated MM cells. SHP2 interacts with RAFTK through a region other than its Src homology 2 domains. We demonstrate that RAFTK is a direct substrate of SHP2 both in vitro and in vivo, and that Tyr(906) in the C-terminal domain of RAFTK mediates its interaction with SHP2. Moreover, overexpression of dominant negative SHP2 blocked the protective effect of IL-6 against Dex-induced apoptosis. These findings demonstrate that SHP2 mediates the anti-apoptotic effect of IL-6 and suggest SHP2 as a novel therapeutic target in MM.