Niche localized HGF plays an integral role in G(0) exit and the return to mitotic activity of adult skeletal muscle satellite cells. HGF actions are regulated by MET initiated intracellular signaling events that include recruitment of SHP2, a protein tyrosine phosphatase. The importance of SHP2 in HGF-mediated signaling was examined in myoblasts and primary cultures of satellite cells. Myoblasts stably expressing SHP2 (23A2-SHP2) demonstrate increased proliferation rates by comparison to controls or myoblasts expressing a phosphatase-deficient SHP2 (23A2-SHP2DN). By comparison to 23A2 myoblasts, treatment of 23A2-SHP2 cells with HGF does not further increase proliferation rates and 23A2-SHP2DN myoblasts are unresponsive to HGF. Importantly, the effects of SHP2 are independent of downstream ERK1/2 activity as inclusion of PD98059 does not blunt the HGF-induced proliferative response. SHP2 function was further evaluated in primary satellite cell cultures. Ectopic expression of SHP2 in satellite cells tends to decrease proliferation rates and siSHP2 causes an increase the percentage of dividing myogenic cells. Interestingly, treatment of satellite cells with high concentrations of HGF (50 ng/ml) inhibits proliferation, which can be overcome by knockdown of SHP2. From these results, we conclude that HGF signals through SHP2 in myoblasts and satellite cells to directly alter proliferation rates.