The side effects of current immunosuppressive drugs have impeded the development of therapies for immune diseases. Selective regulation of STAT signaling is an attractive strategy for treating immune disorders. In this study, we used a small-molecule compound to explore possible means of targeting STAT1 for the treatment of Th1-mediated inflammation. Selective regulation of STAT1 signaling in T cells from C57BL/6 mice was accomplished using fusaruside, a small-molecule compound that triggers the tyrosine phosphorylation of Src homology 2-containing protein tyrosine phosphatase 2 (SHP-2). The interaction of tyrosine phosphorylated SHP-2 (pY-SHP-2) with cytosolic STAT1 prevented the recruitment of STAT1 to IFN-γR and specifically inhibited STAT1 signaling, resulting in a reduction in Th1 cytokine production and an improvement in 2, 4, 6-trinitrobenzene sulfonic acid-induced colitis in mice. Blocking the pY-SHP-2-STAT1 interaction, with SHP-2 inhibitor NSC-87877 or using T cells from conditional SHP-2 knockout mice, reversed the effects of fusaruside, resulting in STAT1 activation and worsened colitis. The fusaruside-induced ability of pY-SHP-2 to selectively sequestrate STAT1 from recruitment to the receptor is independent of its function as a phosphatase, demonstrating a novel role for SHP-2 in regulating both STAT1 signaling and Th1-type immune responses. These findings could lead to increased options for the treatment of Crohn's disease and other Th1-mediated inflammatory diseases.