The alternative activation of M2 macrophages in the lungs has been implicated as a causative agent in pulmonary fibrosis; however, the mechanisms underlying M2 polarization are poorly characterized. In this study, we investigated the role of the ubiquitously expressed Src homology domain–containing tyrosine phosphatase Shp2 in this process. Shp2 inactivation augmented IL-4–mediated M2 polarization in vitro, suggesting that Shp2 regulates macrophage skewing and prevents a bias toward the M2 phenotype. Conditional removal of Shp2 in monocytes/macrophages with lysozyme M promoter–driven Cre recombinase caused an IL-4–mediated shift toward M2 polarization. Additionally, an increase in arginase activity was detected in Shp2∆/∆ mice after ip injection of chitin, whereas Shp2-deficient macrophages showed enhanced M2 polarization and protection against schistosome egg–induced schistosomiasis. Furthermore, mutants were more sensitive than control mice to bleomycin-induced inflammation and pulmonary fibrosis. Shp2 was associated with IL-4Rα and inhibited JAK1/STAT6 signaling through its phosphatase activity; loss of Shp2 promoted the association of JAK1 with IL-4Rα, which enhanced IL-4–mediated JAK1/STAT6 activation that resulted in M2 skewing. Taken together, these findings define a role for Shp2 in alveolar macrophages and reveal that Shp2 is required to inhibit the progression of M2-associated pulmonary fibrosis.