Anaplastic Large Cell Lymphoma (ALCL) is frequently associated with the 2;5 translocation and expresses the NPM-ALK fusion protein which possesses a constitutive tyrosine kinase activity. We analysed SHP1 tyrosine-phosphatase expression and activity in three ALK-positive ALCL cell lines (Karpas 299, Cost and SU-DHL1) and in lymph node biopsies (n=40). We found an inverse correlation between the level of NPM-ALK phosphorylation and SHP1 phosphatase activity. Pull-down and co-immunoprecipitation experiments demonstrated a SHP1/NPM-ALK association. Furthermore, confocal microscopy performed on ALCL cell lines and biopsy specimens showed the co-localization of the two proteins in cytoplasmic bodies containing Y664-phosphorylated NPM-ALK. Dephosphorylation of NPM-ALK by SHP1 demonstrated that NPM-ALK was a SHP1 substrate. Down-regulation of SHP1 expression by RNAi in Karpas cells led to hyperphosphorylation of NPM-ALK, STAT3 activation and increase in cell proliferation. Furthermore, SHP1 over-expression in 3T3 fibroblasts stably expressing NPM-ALK led to the decrease of NPM-ALK phosphorylation, lower cell proliferation and tumor progression in nude mice. These findings show that SHP1 is a negative regulator of NPM-ALK signaling. The use of tissue microarrays revealed that 50% of ALK-positive ALCLs were positive for SHP1. Our results suggest that SHP1 could be a critical enzyme in ALCL biology and a potential therapeutic target.