Src homology domain 2 (SH2)-containing inositol phosphatase 2 (SHIP2) possesses 5-phosphatase activity and an SH2 domain. The role of SHIP2 in platelet-derived growth factor (PDGF) and IGF-I signaling was studied by expressing wild-type (WT-) and a catalytically defective (Delta IP-) SHIP2 into rat aortic smooth muscle cells by adenovirus-mediated gene transfer. PDGF- and IGF-I-induced tyrosine phosphorylation of their respective receptors and phosphatidylinositol 3-kinase (PI3-kinase) activity were not affected by the expression of either WT- or Delta IP-SHIP2. SHIP2 possessed 5'-phosphatase activity to hydrolyze the PI3-kinase product phosphatidylinositol 3,4,5-trisphosphate in vivo. Akt and glycogen synthase kinase 3beta are known to be downstream molecules of PI3-kinase, leading to the antiapoptotic effect. Overexpression of WT-SHIP2 inhibited PDGF- and IGF-I-induced phosphorylation of these molecules and the protective effect of poly(ADP-ribose) polymerase degradation, whereas these phosphorylations and the protective effect were enhanced by the expression of Delta IP-SHIP2, which functions in a dominant negative fashion. Regarding the Ras-MAPK pathway, PDGF- and IGF-I-induced tyrosine phosphorylation of Shc was not affected by the expression of either WT- or Delta IP-SHIP2, whereas both expressed SHIP2 associated with Shc. Importantly, PDGF and IGF-I stimulation of Shc/Grb2 binding, MAPK activation, and 5-bromo-2'-deoxyuridine incorporation were all decreased in both WT- and Delta IP-SHIP2 expression. These results indicate that SHIP2 plays a negative regulatory role in PDGF and IGF-I signaling in vascular smooth muscle cells. As the bifunctional role, our results suggest that SHIP2 regulates PDGF- and IGF-I-mediated signaling downstream of PI3-kinase, leading to the antiapoptotic effect via 5-phosphatase activity, and that SHIP2 regulates the growth factor-induced Ras-MAPK pathway mainly via the SH2 domain.