Janus kinases (JAKs) are cytoplasmic tyrosine kinases critical for signaling by growth hormone (GH) and many other ligands that bind to members of the cytokine receptor superfamily. SH2-B beta was previously identified as a JAK2-interacting protein that is tyrosyl phosphorylated in response to GH and other cytokines that activate JAK2. In this stud, we examined whether SH2-B beta alters the activity of JAK2. SH2-B beta, when coexpressed with JAK2, significantly increased the tyrosyl phosphorylation of JAK2 and multiple other cellular proteins and stimulated the kinase activity of JAK2 by approximate to 20-fold. Coexpression of SH2-B beta with JAK2 dramatically increased tyrosyl phosphorylation of signal transducer and activator of transcription (Stat)5B and Stat3, physiological substrates of JAK2. SH2-B beta(R555E) with a defective; Src homology 2 domain was unable to stimulate JAK2 and JAK2-mediated tyrosyl phosphorylation of Stat5B and Stat3. More importantly, SH2- B beta enhanced GH induced tyrosyl phosphorylation of endogenous JAK2 and ligand-induced tyrosyl phosphorylation of Stat5B by endogenous JAK2. In contrast, SH2-B beta did not potentiate the activation of other tyrosine kinases including the receptors for platelet-derived grow th factor, epidermal growth factor, or nerve growth factor (TrKA), tyrosine kinases that also bind SH2-B beta. These data demonstrate that SH2-B beta is a potent cytoplasmic activator of JAK2 and is thereby expected to be an important cellular regulator of signaling by GH and other hormones and cytokines that activate JAK2.