The stem cell factor (SCF)/Kit system has served as a classic model in deciphering molecular signaling events in the hematopoietic compartment, and Kit expression is a most critical marker for hematopoietic stem cells (HSCs) and progenitors. However, it remains to be elucidated how Kit expression is regulated in HSCs. Herein we report that a cytoplasmic tyrosine phosphatase Shp2, acting downstream of Kit and other RTKs, promotes Kit gene expression, constituting a Kit-Shp2-Kit signaling axis. Inducible ablation of PTPN11/Shp2 resulted in severe cytopenia in BM, spleen, and peripheral blood in mice. Shp2 removal suppressed the functional pool of HSCs/progenitors, and Shp2-deficient HSCs failed to reconstitute lethally irradiated recipients because of defects in homing, self-renewal, and survival. We show that Shp2 regulates coordinately multiple signals involving up-regulation of Kit expression via Gata2. Therefore, this study reveals a critical role of Shp2 in maintenance of a functional HSC/progenitor pool in adult mammals, at least in part through a kinase-phosphatase-kinase cascade.