Angiotensin II (ANG II) exerts its effects on vascular smooth muscle cells through G protein-coupled AT₁ receptors. ANG II stimulation activates the Janus kinase/signal transducers and activators of transcription (JAK/STAT) pathway by inducing tyrosine phosphorylation, activation, and association of JAK2 with the receptor. Association appears to be required for JAK2 phosphorylation. In the present study, electroporation experiments with neutralizing anti-Src homology phosphatase-1 (SHP-1) and anti-SHP-2 antibodies and time course determinations of SHP-1 and SHP-2 activation and complexation with JAK2 suggest that the tyrosine phosphatases, SHP-1 and SHP-2, have opposite roles in ANG II-induced JAK2 phosphorylation. SHP-1 appears responsible for JAK2 dephosphorylation and termination of the ANG II-induced JAK/STAT cascade. SHP-2 appears to have an essential role in JAK2 phosphorylation and initiation of the ANG II-induced JAK/STAT cascade leading to cell proliferation. The motif in the AT₁ receptor that is required for association with JAK2 is also required for association with SHP-2. Furthermore, SHP-2 is required for JAK2-receptor association. SHP-2 may thus play a role as an adaptor protein for JAK2 association with the receptor, thereby facilitating JAK2 phosphorylation and activation.