Src homology region 2-containing protein tyrosine phosphatase 2 (SHP2), encoded by the PTPN11, is a non-receptor protein tyrosine phosphatase that expressed in cytoplasmic. Served as an important hub, SHP2 provide crosstalk for several intracellular pathways such as Ras-Raf-MEK-ERK, PI3K-AKT-mTOR, JAK-STAT, and PD-1/PD L-1 pathways in either growth factor-dependent or immune-dependent manner. Both the classical phosphatase-dependent and -independent roles of SHP2 are involved in the pathologic process of several diseases, making SHP2 a promising drug target. PTPN11 mutations, including gain-of-function (GOF) mutation and loss-of-function (LOF) mutation, are frequently observed in numerous diseases. These mutations are characterized by structural rearrangement and electric potential change, leading to the alteration of enzyme activity and binding affinity toward phosphotyrosine peptide. The dynamic conformational transition of SHP2 under either physiological or pathological conditions provides directions for the drug discovery targeting SHP2. SHP2-targeted inhibitors, proteolysis-targeting chimera (PROTAC)-based degraders, and activators have shown therapeutic promise against numerous diseases. To date, nine allosteric inhibitors are undergoing clinical assessment as mono- or combined therapy for treating solid tumors or adaptive resistant cancers. In this chapter, we comprehensively summarize the multifaceted functions of SHP2 and the structural basis of SHP2 under different conditions. Additionally, the challenges and prospects of SHP2-targeted drug discovery are also discussed. This chapter will not only facilitate the underlying pathological mechanisms of SHP2-associated diseases but also provide a landscape for the advances of SHP2-targeted drug discovery.