SHP-1 has been proposed to be a tumor suppressor gene for several cancers. The expression of SHP-1 protein is diminished or abolished in most leukemia and lymphoma cell lines and tissues, and in some non-hematopoietic cancer cell lines, such as estrogen receptor (ER) negative breast cancer cell lines and some colorectal cancer cell lines. However, we do not know whether the reduced SHP-1 expression is the cause of cancer diseases or the secondary effect of cancer developments. Here, we first demonstrate that SHP-1 has general tumor suppressing function in SHP-1 transfected cell lines. Transfected SHP-1 inhibits the growth of three lymphoma/leukemia cell lines (Ramos, H9, Jurkat) and one breast cancer cell line (HTB26). We also demonstrate a possible molecular mechanism for the tumor suppressing function of SHP-1: SHP-1 inhibits cell growth partly by negative regulation of activated JAK kinase. In addition, we find, for the first time, that SHP-1 down-regulates the level of TYK2 kinase in H9 cells and of JAK1 kinase in HTB26 cells, by accelerating their degradation. The SHP-1 accelerated degradation of JAK1 kinase in HTB26 cells was blocked with the treatment of MG132, a specific inhibitor for proteasome-mediated proteolysis. Our data suggest a new function of SHP-1 in the regulation of proteasome-mediated degradation pathway. © 2003 Wiley-Liss, Inc.