The transcription factor nuclear factor kappaB (NF-kappaB) plays an important role in inflammation and cancer, is activated by a variety of stimuli including tumor necrosis factor alpha, interleukin-1, UV irradiation, and viruses, as well as receptor tyrosine kinases, such as epidermal growth factor receptor (EGFR). Although previous studies suggest that EGFR can induce NF-kappaB, the mechanism of this activation remains unknown. In this study, we identify the components of the EGFR-induced signalosome in human glioblastoma cells required to regulate NF-kappaB activation. Immunoprecipitation analyses with ErbB-modulated cells indicate that association between SHP-2 and Grb2-associated binder 1 (Gab1) is the critical step in the formation of the signalosome linking EGFR to NF-kappaB activation. We also show that EGFR-induced NF-kappaB activation is mediated by the PI3-kinase/Akt activation loop. Overexpression of SHP-2, Gab1, and myristoylated Akt significantly upregulated NF-kappaB transcriptional activity and DNA binding activity in glioblastoma cells. Interestingly, overexpression of either one of the two SH2 domain mutants of SHP-2, R32E or R138E, slightly reduced NF-kappaB activity relative to that of wild-type SHP-2, indicating that the SH2 domains of SHP-2 are required for EGFR-induced NF-kappaB activation. On the other hand, ectopic overexpression of either a Gab1 mutant incapable of binding to SHP-2 (Y627F) or a phosphatase-inactive SHP-2 mutant (C459S) caused a significant increase in NF-kappaB activity. Moreover, SHP-2 C459S-expressing cells displayed higher Gab1 phosphotyrosine content, suggesting that SHP-2 regulates Gab1 phosphorylation through its phosphatase domain, which confers a negative regulatory effect on NF-kappaB activity. These results indicate that SHP-2/Gab1 association is critical for linking EGFR to NF-kappaB transcriptional activity via the PI3-kinase/Akt signaling axis in glioblastoma cells and that SHP-2 acts as a dual regulator of NF-kappaB activation.