SHP-2 is a dual-specificity phosphatase involved in Stat1 dephosphorylation at both tyrosine and serine residues in nuclei.

Signal transducer and activator of transcription (STAT) proteins are both tyrosine- and serine-phosphorylated, mediating signal transduction and gene regulation. Following gene regulation, STAT activity in the nucleus is then terminated by a nuclear protein phosphatase(s), which remains unidentified. Using novel antibody arrays to screen the Stat1-specific protein phosphatase(s), we identified a SHP-2-Stat1 interaction in the A431 cell nucleus. SHP-2 and Stat1 nuclear localization and their association in response to either epidermal growth factor or interferon-gamma (IFNgamma) were confirmed by immunofluorescent staining and affinity precipitation assays. The SHP-2 C-terminal region containing protein-tyrosine phosphatase activity interacted with the C-terminal SH2 transcriptional activation domain of Stat1. In SHP-2-/- mouse fibroblast cells, Stat1 phosphorylation at both the tyrosine residue Tyr(701) and the serine residue Ser(727) by IFNgamma was enhanced and prolonged. Consistently, purified GST-SHP-2 dephosphorylated Stat1 at both tyrosine and serine residues when immunoprecipitated phospho-Stat1 or a peptide corresponding to the sequence surrounding Tyr(P)(701) or Ser(P)(727) of Stat1 was used as the substrate. Overexpression of SHP-2 in 293T cells inhibited IFNgamma-dependent Stat1 phosphorylation and suppressed Stat1-dependent induction of luciferase activity. Our findings demonstrate that SHP-2 is a dual-specificity protein phosphatase involved in Stat1 dephosphorylation at both tyrosine and serine residues and plays an important role in modulating STAT function in gene regulation.