Tyrosine phosphorylation and dephosphorylation of proteins play a critical role for many T‐cell functions. The opposing actions of protein tyrosine kinases (PTKs) and protein tyrosine phosphatases (PTPs) determine the level of tyrosine phosphorylation at any time. It is well accepted that PTKs are essential during T‐cell signaling; however, the role and importance of PTPs are much less known and appreciated. Both transmembrane and cytoplasmic tyrosine phosphatases have been identified in T cells and shown to regulate T‐cell responses. This review focuses on the roles of the two cytoplasmic PTPs, the Src‐homology 2 domain (SH2)‐containing SHP‐1 and SHP‐2, in T‐cell signaling, development, differentiation, and function.