The Src homology 2 domain-containing protein tyrosine phosphatases SHP-1 and SHP-2 play an important role in many intracellular signaling pathways. Both SHP-1 and SHP-2 have been shown to interact with a diverse range of cytosolic and membrane-bound signaling proteins. Generally, SHP-1 and SHP-2 perform opposing roles in signaling processes; SHP-1 acts as a negative regulator of transduction in hemopoietic cells, whereas SHP-2 acts as a positive regulator. Intriguingly, SHP-1 has been proposed to play a positive regulating role in nonhemopoietic cells, although the mechanisms for this are not understood. Here we show that green fluorescent protein-tagged SHP-1 is unexpectedly localized within the nucleus of transfected HEK293 cells. In contrast, the highly related SHP-2 protein is more abundant within the cytoplasm of transfected cells. In accordance with this, endogenous SHP-1 is localized within the nucleus of several other nonhemopoietic cell types, whereas SHP-2 is distributed throughout the cytoplasm. In contrast, SHP-1 is confined to the cytoplasm of hemopoietic cells, with very little nuclear SHP-1 evident. Using chimeric SHP proteins and mutagenesis studies, the nuclear localization signal of SHP-1 was identified within the C-terminal domain of SHP-1 and found to consist of a short cluster of basic amino acids (KRK). Although the KRK motif resembles half of a bipartite nuclear localization signal, it appears to function independently and is absolutely required for nuclear import. Our findings show that SHP-1 and SHP-2 are distinctly localized within nonhemopoietic cells, with the localization of SHP-1 differing dramatically between nonhemopoietic and hemopoietic cell lineages. This implies that SHP-1 nuclear import is a tightly regulated process and indicates that SHP-1 may possess novel nuclear targets.