SummaryPodosomes are actin-enriched membrane protrusions that play important roles in extracellular matrix degradation and invasive cell motility. Podosomes undergo self-assembly into large rosette-like structures in Src-transformed fibroblasts, osteoclasts and certain highly invasive cancer cells. Several protein tyrosine kinases have been shown to be important for the formation of podosome rosettes, but little is known regarding the role of protein tyrosine phosphatases in this process. We found that knockdown of the Src homolog domain-containing phosphatase 2 (SHP2) significantly increased podosome rosette formation in Src-transformed fibroblasts. By contrast, SHP2 overexpression suppressed podosome rosette formation in these cells. The phosphatase activity of SHP2 was essential for the suppression of podosome rosette formation. SHP2 selectively suppressed the tyrosine phosphorylation of Tks5, a scaffolding protein required for podosome formation. The inhibitory effect of SHP2 on podosome rosette formation was associated with the increased activation of Rho-associated kinase (ROCK) and the enhanced polymerization of vimentin filaments. A higher content of polymerized vimentin filaments was correlated with a lower content of podosome rosettes. Taken together, our findings indicate that SHP2 serves as a negative regulator of podosome rosette formation through the dephosphorylation of Tks5 and the activation of ROCK-mediated polymerization of vimentin in Src-transformed fibroblasts.