SHP-1, a protein tyrosine phosphatase containing two tandem SH2 domains, is autoinhibited at rest by its N-terminal SH2 (N-SH2) domain. Relief from autoinhibition and a subsequent 10-60-fold increase in V(max) have been observed upon N-SH2 domain engagement by a specific phosphotyrosyl ligand or upon deletion of the SH2 domains to yield the catalytic PTPase domain. In this study, we observed that glycerol and propane-1,2-diols, at concentrations of 4-6 M, accelerated the k(cat) of the full length enzyme by 47-fold and of the PTPase domain by 8-fold. Glycerol also increases the rate of proteolytic cleavage between the SH2 and catalytic PTPase domains. In stopped-flow studies using p-nitrophenyl phosphate (pNPP) as a substrate, a burst of p-nitrophenolate in the full length enzyme was not observed; however, a 50-70% stoichiometric burst was observed with the PTPase domain. Rapid quench studies using [32P]pNPP as a substrate showed a very low level of covalent [32P]phosphocysteinyl enzyme intermediate accumulation: 0.06% in the full length enzyme and 1% in the PTP domain. Stimulation by glycerol reduced the accumulating levels of phosphocysteinyl enzyme in both cases of full length SHP-1 and the PTPase domain; however, glycerol is not acting as a cosubstrate since no glycerophosphate product was detectable. It is likely that, for full length SHP-1, with pNPP as a model substrate, enzyme-substrate complex (ES) accumulates in its basal autoinhibited state, whereas enzyme-product complex (EP(i)) accumulates in its pY ligand-bound activated state. Glycerol probably relaxes the compact structure of SHP-1 and the PTP domain, thereby accelerating the catalytic rates in both cases by increasing forward reaction rates of ES and EP(i).