The Src homology 2-containing inositol phosphatase SHIP1 functions in hemopoietic cells to limit activation events mediated by PI3K products, including Akt activation and cell survival. In contrast to the limited cellular expression of SHIP1, the related isoform SHIP2, is widely expressed in both parenchymal and hemopoietic cells. The goal of this study was to determine how SHIP2 functions to regulate M-CSF signaling. We report that 1) SHIP2 was tyrosine-phosphorylated in M-CSF-stimulated human alveolar macrophages, human THP-1 cells, murine macrophages, and the murine macrophage cell line RAW264; 2) SHIP2 associated with the M-CSF receptor after M-CSF stimulation; and 3) SHIP2 associated with the actin-binding protein filamin and localization to the cell membrane, requiring the proline-rich domain, but not on the Src homology 2 domain of SHIP2. Analyzing the function of SHIP2 in M-CSF-stimulated cells by expressing either wild-type SHIP2 or an Src homology 2 domain mutant of SHIP2 reduced Akt activation in response to M-CSF stimulation. In contrast, the expression of a catalytically deficient mutant of SHIP2 or the proline-rich domain of SHIP2 enhanced Akt activation. Similarly, the expression of wild-type SHIP2 inhibited NF-kappaB-mediated gene transcription. Finally, fetal liver-derived macrophages from SHIP2 gene knockout mice enhanced activation of Akt in response to M-CSF treatment. These data suggest a novel regulatory role for SHIP2 in M-CSF-stimulated myeloid cells.