Comparison of the inflammatory cytokine profile in bone marrow-derived macrophages (BMDMs) from normal and Src homology domain 2-containing tyrosine phosphatase-1 (SHP-1)–deficient Motheaten (me/me) mice revealed a dramatic suppression of IL-6 transcript and protein in me/me BMDMs after LPS stimulation. Interfering with SHP-1 expression using antisense SHP-1 oligonucleotides led to a significant downregulation of IL-6 in normal BMDMs. Conversely, reconstitution of me/me BMDMs with the SHP-1 gene using adenoviral vectors restored IL-6 production. Expression of only SHP-1 Src homology region 2 domains in normal BMDMs inhibited IL-6 production, confirming that IL-6 regulation depends on SHP-1 phosphatase activity. We further demonstrated that loss of SHP-1 function affects proper phosphorylation of Erk1/2 MAPKs and, to a lesser degree, of NF-κB downstream of TLR4 in BMDMs. Inefficient phosphorylation of Erk1/2 MAPKs abrogated the activation of C/EBPβ transcription factor, which was reversed on restoration of SHP-1 function and led to a concomitant enhancement of IL-6 production. We demonstrate that IL-6 production is regulated by a complex network of signaling pathways that include SHP-1–dependent activation of Erk1/2–C/EBPβ and NF-κB, in addition to SHP-1–independent IκB pathway through the activation of protein tyrosine kinases downstream of TLR4. Taken together, these results revealed for the first time, to our knowledge, a positive and critical role of SHP-1 in IL-6 regulation and dependence of Erk1/2–C/EBPβ pathway in addition to that of IκB on SHP-1 activity required for IL-6 induction after LPS stimulation.