We have demonstrated previously that the protein tyrosine phosphatase SHP-1 seems to play a role in glial development and is upregulated in non-dividing astrocytes after injury. The present study examines the effect of loss of SHP-1 on the CNS response to permanent focal ischemia. SHP-1 deficient (me/me) mice and wild-type littermates received a permanent middle cerebral artery occlusion (MCAO). At 1, 3, and 7 days after MCAO, infarct volume, neuronal survival and cell death, gliosis, and inflammatory cytokine levels were quantified. SHP-1 deficient me/me mice display smaller infarct volumes at 7 days post-MCAO, increased neuronal survival within the ischemic penumbra, and decreased numbers of cleaved caspase 3+ cells within the ischemic core compared with wild-type mice. In addition, me/me mice exhibit increases in GFAP+ reactive astrocytes, F4-80+ microglia, and a concomitant increase in the level of interleukin 12 (IL-12) over baseline compared with wild-type. Taken together, these results demonstrate that loss of SHP-1 results in greater healing of the infarct due to less apoptosis and more neuronal survival in the ischemic core and suggests that pharmacologic inactivation of SHP-1 may have potential therapeutic value in limiting CNS degeneration after ischemic stroke.