Recent studies in mice have demonstrated that the protein tyrosine phosphatase SHP-1 is a crucial negative regulator of cytokine signaling, inflammatory gene expression, and demyelination in central nervous system. The present study investigates a possible similar role for SHP-1 in the human disease multiple sclerosis (MS). The levels of SHP-1 protein and mRNA in PBMCs of MS patients were significantly lower compared to normal subjects. Moreover, promoter II transcripts, expressed from one of two known promoters, were selectively deficient in MS patients. To examine functional consequences of the lower SHP-1 in PBMCs of MS patients, we measured the intracellular levels of phosphorylated STAT6 (pSTAT6). As expected, MS patients had significantly higher levels of pSTAT6. Accordingly, siRNA to SHP-1 effectively increased the levels of pSTAT6 in PBMCs of controls to levels equal to MS patients. Additionally, transduction of PBMCs with a lentiviral vector expressing SHP-1 lowered pSTAT6 levels. Finally, multiple STAT6-responsive inflammatory genes were increased in PBMCs of MS patients relative to PBMCs of normal subjects. Thus, PBMCs of MS patients display a stable deficiency of SHP-1 expression, heightened STAT6 phosphorylation, and an enhanced state of activation relevant to the mechanisms of inflammatory demyelination.