In Xenopus ectodermal explants (animal caps), fibroblast growth factor (FGF) evokes two major events: induction of ventrolateral mesodermal tissues and elongation. TheXenopus FGF receptor (XFGFR) and certain downstream components of the XFGFR signal transduction pathway (e.g., members of the Ras/Raf/MEK/mitogen-activated protein kinase [MAPK] cascade) are required for both of these processes. Likewise, activated versions of these signaling components induce mesoderm and promote animal cap elongation. Previously, using a dominant negative mutant approach, we showed that the protein-tyrosine phosphatase SHP-2 is necessary for FGF-induced MAPK activation, mesoderm induction, and elongation of animal caps. Taking advantage of recent structural information, we now have generated novel, activated mutants of SHP-2. Here, we show that expression of these mutants induces animal cap elongation to an extent comparable to that evoked by FGF. Surprisingly, however, activated mutant-induced elongation can occur without mesodermal cytodifferentiation and is accompanied by minimal activation of the MAPK pathway and mesodermal marker expression. Our results implicate SHP-2 in a pathway(s) directing cell movements in vivo and identify potential downstream components of this pathway. Our activated mutants also may be useful for determining the specific functions of SHP-2 in other signaling systems.