SHPS‐1 is a transmembrane protein whose extracellular region interacts with CD47 and whose cytoplasmic region undergoes tyrosine phosphorylation and there by binds the protein tyrosine phosphatase SHP‐2. Formation of this complex is implicated in regulation of cell migration by an unknown mechanism. A CD47‐Fc fusion protein or antibodies to SHPS‐1 inhibited migration of human melanoma cells or of CHO cells overexpressing SHPS‐1. Overexpression of wild‐type SHPS‐1 promoted CHO cell migration, whereas expression of the SHPS‐1‐4F mutant, which lacks the phosphorylation sites required for SHP‐2 binding, had no effect. Antibodies to SHPS‐1 failed to inhibit migration of CHO cells expressing SHPS‐1‐4F. SHPS‐1 ligands induced the dephosphorylation of SHPS‐1 and dissociation of SHP‐2. Antibodies to SHPS‐1 also enhanced Rho activity and induced both formation of stress fibers and adoption of a less polarized morphology in melanoma cells. Our results suggest that engagement of SHPS‐1 by CD47 prevents the positive regulation of cell migration by this protein. The CD47–SHPS‐1 system and SHP‐2 might thus contribute to the inhibition of cell migration by cell–cell contact.