YAP and TAZ, Hippo signaling targets, act as a rheostat for nuclear SHP2 function.

SHP2 is a ubiquitously expressed protein tyrosine phosphatase, deregulation of which is associated with malignant neoplasms and developmental disorders. SHP2 is required for full activation of RAS-Erk signaling in the cytoplasm and is also present in the nucleus, where it promotes Wnt target gene activation through dephosphorylation of parafibromin. SHP2 is distributed both to the cytoplasm and nucleus at low cell density but is excluded from the nucleus at high cell density. Here, we show that SHP2 physically interacts with transcriptional coactivators YAP and TAZ, targets of the cell-density-sensing Hippo signal. Through the interaction, nonphosphorylated YAP/TAZ promote nuclear translocalization of SHP2, which in turn stimulates TCF/LEF- and TEAD-regulated genes via parafibromin dephosphorylation. Conversely, YAP/TAZ phosphorylated by Hippo signaling sequester SHP2 in the cytoplasm, thereby preventing nuclear accumulation of SHP2. Hence, YAP/TAZ serve as a rheostat for nuclear SHP2 function, which is switched off by the Hippo signal.