Shp-1 and Shp-2 are cytoplasmic phosphotyrosine phosphatases with similar structures. Mice deficient in Shp-2 die at midgestation with defects in mesodermal patterning, and a hypomorphic mutation at the Shp-1 locus results in the moth-eaten viable (me^v) phenotype. Previously, a critical role of Shp-2 in mediating erythroid/myeloid cell development was demonstrated. By using the RAG-2–deficient blastocyst complementation, the role of Shp-2 in lymphopoiesis has been determined. Chimeric mice generated by injecting Shp-2^−/− embryonic stem cells into Rag-2–deficient blastocysts had no detectable mature T and B cells, serum immunoglobulin M, or even Thy-1⁺ and B220⁺ precursor lymphocytes. Collectively, these results suggest a positive role of Shp-2 in the development of all blood cell lineages, in contrast to the negative effect of Shp-1 in this process. To determine whether Shp-1 and Shp-2 interact in hematopoiesis, Shp-2^−/−:me^v/me^v double-mutant embryos were generated and the hematopoietic cell development in the yolk sacs was examined. More hematopoietic stem/progenitor cells were detected in Shp-2^−/−:me^v/me^vembryos than in Shp-2^−/− littermates. The partial rescue by Shp-1 deficiency of the defective hematopoiesis caused by the Shp-2 mutation suggests that Shp-1 and Shp-2 have antagonistic effects in hematopoiesis, possibly through a bidirectional modulation of the same signaling pathway(s).