SH2-containing inositol phosphatase 2 (SHIP2) possesses 5-phosphatase activity and an SH2 domain. The role of SHIP2 in PDGF and IGF-1 signaling was studied by expressing wild-type (WT)- and a catalytically defective (IP)-SHIP2 into rat aortic smooth muscle cells by adenovirus-mediated gene transfer. PDGF- and IGF-1-induced tyrosine phosphorylation of their respective receptors and PI3-kinase activity were not affected by expression of either WT- or IP-SHIP2. SHIP2 possessed 5'-phosphatase activity to hydrolyze PI3-kinase product PI(3,4,5)P3 in vivo. Akt and GSK3 are known to be downstream molecules of PI3-kinase leading to the anti-apoptotic effect. Overexpression of WT-SHIP2 inhibited PDGF- and IGF-1-induced phosphorylation of these molecules and the protective effect of PARP degradation, whereas these phosphorylations and the protective effect were enhanced by expression of IP-SHIP2 that functions in a dominant negative fashion. Regarding the Ras-MAP kinase pathway, PDGF- and IGF-1-induced tyrosine phosphorylation of Shc was not affected by expression of either WT- or IP-SHIP2, while both expressed SHIP2 associated with Shc. Importantly, PDGF and IGF-1 stimulation of Shc/Grb2 binding, MAP kinase activation, and BrdU incorporation were all decreased in both WT- and IP-SHIP2 expression. These results indicate that SHIP2 plays a negative regulatory role in PDGF and IGF-1 signaling in vascular smooth muscle cells. As the bi-functional role, our results suggest that SHIP2 regulates PDGF- and IGF-1-mediated signaling downstream of PI3-kinase leading to the anti-apoptotic effect via the 5-phosphatase activity, and that SHIP2 regulates the growth factor-induced Ras-MAP kinase pathway mainly via the SH2 domain.