Src homology-2 containing protein tyrosine phosphatase (SHP2), encoded by PTPN11, has been proven to participate in bone-related diseases, such as Noonan syndrome (NS), metachondromatosis and osteoarthritis. However, the mechanisms of SHP2 in bone remodeling and homeostasis maintenance are complex and undemonstrated. The abnormal expression of SHP2 can influence the differentiation and maturation of osteoblasts, osteoclasts and chondrocytes. Meanwhile, SHP2 mutations can act on the immune system, vasculature and nervous system, which in turn affect bone development and remodeling. Signaling pathways regulated by SHP2, such as mitogen-activated protein kinase (MAPK), Indian hedgehog (IHH) and phosphatidylinositol-4,5-bisphosphate 3-kinase (PI3K)/protein kinase B (AKT), are also involved in the proliferation, differentiation and migration of bone functioning cells. This review summarizes the recent advances of SHP2 on osteogenesis-related cells and niche cells in the bone marrow microenvironment. The phenotypic features of SHP2 conditional knockout mice and underlying mechanisms are discussed. The prospective applications of the current agonists or inhibitors that target SHP2 in bone-related diseases are also described. Full clarification of the role of SHP2 in bone remodeling will shed new light on potential treatment for bone related diseases.