Furthermore, the combination of SHP2 inhibitors with anti-PD1 antibody resulted in significant regressions in tumor growth in syngeneic mouse models. SHP2 inhibition also promoted T cell proliferation and function through its effect in cancer cells and immune suppressive myeloid cells. In cancer cells, SHP2 inhibition augmented interferon γ (IFNγ) signaling, which resulted in increased expression of its downstream targets, including chemoattractant cytokines and antigen presenting machinery. In the present study, we uncovered an immune modulatory role of SHP2 in the context of tumor-immune cell interactions and discovered that inhibiting SHP2 function triggers favorable changes in the tumor microenvironment and control of cancer progression. Given the complexity of the tumor microenvironment and the important role of SHP2 in cancer cell signaling, it is necessary to study the effect of inhibiting SHP2 activity in both tumor and immune cells to gain a better understanding of its therapeutic potential. SHP2 is also downstream of CSF-1 signaling promoting macrophage proliferation and M2 polarization, suggesting another mechanism by which SHP2 inhibition could enhance anti-tumor immunity 23, 24, 25. However, selective deletion of SHP2 in CD4 and CD8 T cells in a different study ultimately leads to melanoma progression and metastasis 22. T cell-restricted ablation of SHP2 in a murine colon xenograft model increases anti-tumor immune responses by enhancing the function of CD8 cytotoxic T cells 21. Beyond these molecular mechanisms, the role of SHP2 in the tumor microenvironment is largely unknown and its role in anti-tumor immunity remains to be explored. In T lymphocytes, SHP2 is recruited to the cytoplasmic tails of PD-1 and CTLA-4 and suppresses T cell activation by dephosphorylating TCRζ chains, ZAP70 and the costimulatory receptor CD28 17, 18, 19, 20. In addition to its oncogenic role in cancer cells, SHP2 is involved in multiple signaling pathways in immune cells. SHP2 inhibition by the selective allosteric inhibitor SHP099 exhibits promising therapeutic potential in RTK/KRAS-driven cancers 15, 16. SHP2 promotes proliferation and survival of cancer cells by promoting GTP loading of RAS 14, thereby activating RAS-MAPK signaling. The Src homology-2 domain-containing phosphatase 2 (SHP2), encoded by the gene PTPN11, is a ubiquitously expressed non-receptor tyrosine phosphatase which plays a regulatory role in signal transduction downstream of multiple receptor tyrosine kinases (RTKs) such as EGFR, FGFR and MET 12, 13. Investigating the effect of targeted therapies on anti-tumor immunity is critical to rationally advance the design of combination therapies to improve patient outcomes. Targeted therapies, including cell cycle inhibitors targeting CDK4/6 5, 6, MAP kinase signaling inhibitors 7 and chromatin-modifying enzyme inhibitors targeting EZH2, HDAC and DNMT 8, 9, 10, 11, have been shown to favor anti-tumor immune responses and the effectiveness of immunotherapy in pre-clinical cancer models. Experimental and clinical exploration has led to the initiation of numerous clinical trials combining immune checkpoint blockade with targeted and conventional therapies such as radiation and chemotherapy 4. Yet, the majority of cancer patients do not respond to immunotherapy, creating a need for novel approaches 3. Immune checkpoint inhibitors and CAR-T cell therapies have emerged as highly effective approaches for treating cancer 1, 2. Overall, our study reveals novel functions of SHP2 in tumor immunity and proposes that targeting SHP2 is a promising strategy for cancer immunotherapy. SHP2 inhibition enhanced responses to anti-PD-1 blockade in syngeneic mouse models. Furthermore, SHP2 inhibition diminished the differentiation and inhibitory function of immune suppressive myeloid cells in the tumor microenvironment. Inhibition of SHP2 activity augmented tumor intrinsic IFNγ signaling resulting in enhanced chemoattractant cytokine release and cytotoxic T cell recruitment, as well as increased expression of MHC Class I and PD-L1 on the cancer cell surface. Knockout of SHP2 using CRISPR/Cas9 gene editing showed that targeting SHP2 in cancer cells contributes to this immune response. Targeting this protein with allosteric SHP2 inhibitors promoted anti-tumor immunity, including enhancing T cell cytotoxic function and immune-mediated tumor regression. In this study, we discovered a novel immune modulatory function of SHP2. SHP2 is a ubiquitous tyrosine phosphatase involved in regulating both tumor and immune cell signaling. Scientific Reports volume 11, Article number: 1399 ( 2021) SHP2 blockade enhances anti-tumor immunity via tumor cell intrinsic and extrinsic mechanisms