Src homology 2 (SH2)-containing protein tyrosine phosphatase 2 (SHP2), encoded by the human PTPN11 gene, is a ubiquitously expressed protein tyrosine phosphatase (PTP) that consists of two tandem Src homology (SH2) domains (N-SH2 and C-SH2), a PTP catalytic domain, and a C-terminal tail with tyrosyl phosphorylation sites. It plays critical roles in numerous cellular processes through the regulation of various signaling pathways in PTP catalytic activity-dependent and -independent manners. Dysfunction of SHP2 resulting from pathogenic mutations and aberrant expression leads to the dysregulation of multiple signaling pathways, thus contributing to different human disorders. Germline and somatic mutations in PTPN11 are involved in Noonan syndrome (NS), LEOPARD syndrome (LS), and hematological malignancies, as well as several solid tumors. In this report, we provide an overview of the current knowledge of the structure and function of SHP2, and further discuss the molecular and pathogenic mechanism of SHP2 in human diseases, with a special focus on tumorigenesis. Furthermore, we summarize that SHP2 might itself represent a potential drug target for cancer prevention and treatment. Ongoing research and development of SHP2-specific inhibitors would enhance this potential.