The structure of the SHP-2 tyrosine phosphatase, determined at 2.0 Ang
strom resolution, shows how its catalytic activity is regulated by its
two SH2 domains. In the absence of a tyrosine-phosphorylated binding
partner, the N-terminal SH2 domain binds the phosphatase domain and di
rectly blocks its active site. This interaction alters the structure o
f the N-SH2 domain, disrupting its phosphopeptide-binding cleft. Conve
rsely, interaction of the N-SH2 domain with phosphopeptide disrupts it
s phosphatase recognition surface. Thus, the N-SHP domain is a conform
ational switch; it either binds and inhibits the phosphatase, or it bi
nds phosphoproteins and activates the enzyme. Recognition of bisphosph
orylated ligands by the tandem SH2 domains is an integral element of t
his switch; the C-terminal SH2 domain contributes binding energy and s
pecificity, but it does not have a direct role in activation.