Signal transduction pathways are responsible for maintaining cellular functions, including proliferation, differentiation, apoptosis, and cell cycle progression. These pathways are maintained through the propagation of phosphorylation signals by protein kinases, as well as the removal of phosphorylation signals by protein phosphatases. Depending on the context, post-translational modification could have either a positive or negative effect on a signaling pathway. Intricate networks of positive and negative regulators offer a challenging target for the dissection of cell signaling mechanisms, particularly regarding the more subtle dampening of signal transduction through phosphatases. We report the development of two complimentary methods for the optical control of a complex phosphatase: SH2 domain-containing protein tyrosine phosphatase-2 (SHP2). We investigated controlling the catalytic function of SHP2 through (1) site-specific incorporation of a caged tyrosine for light activation of catalytic activity for the control of an essential substrate binding residue and (2) site-specific incorporation of a caged lysine at a conserved residue within an allosteric pocket for the control of SHP2 binding partner docking sites. These methods are generalizable to proteins bearing either a protein tyrosine phosphatase (PTP) catalytic domain or an SH2 domain, including SHP1, PTP family phosphatases, and a diverse range of SH2 domain-containing proteins.