SHP and SH-PTP2 are related cytoplasmic protein-tyrosine phosphatases having two tandem amino-terminal src homology 2 domains linked to a single catalytic domain. There is growing evidence that these two molecules may exhibit opposing effects within specific signaling pathways. However, the relative contributions of the src homology 2 domains or the catalytic domains to these opposing effects are not well known. To evaluate the potential contribution of the catalytic domains, we compared the substrate specificity of the two phosphatases. As seen previously, the catalytic activities of bacterially expressed SHP and SH-PTP2 were regulated by the presence of the linked src homology 2 domains. In addition, we characterized a cryptic thrombin cleavage site within the carboxy-terminus of SHP that led to a striking increase in the activity of the catalytic domain. Employing a panel of phosphopeptide substrates whose sequences were modeled after intracellular phosphorylation sites, both SHP and SH-PTP2 demonstrated a similar specificity pattern. Similar to SH-PTP2, SHP failed to elicit detectable phosphate release from several phosphopeptide substrates, while displaying catalytic efficiencies that ranged over ≈40–1.6×103 M−1 s−1 towards other substrates. In contrast, the PTP-1B phosphatase dephosphorylated all of the phosphopeptide substrates tested with approximately equal ease. The overall similarity demonstrated by the catalytic domains of SHP and SH-PTP2 suggested that differences in the in vivo behavior of these two molecules might not stem from differences in the substrate specificity of the catalytic domains, suggesting instead that the specificity of the src homology 2 domains is more important in this regard.