Abstract The ubiquitously expressed protein tyrosine phosphatase SHP2 is required for signalling downstream of receptor tyrosine kinases (RTKs) and plays a role in regulating many cellular processes. Recent advances have shown that genetic knockdown and pharmacological inhibition of SHP2 suppresses RAS/MAPK signalling and inhibits proliferation of RTK-driven cancer cell lines. SHP2 is now understood to act upstream of RAS and plays a role in KRAS-driven cancers, an area of research which is rapidly growing. Considering that RTK deregulation often leads to a wide range of cancers and the newly appreciated role of SHP2 in KRAS-driven cancers, SHP2 inhibitors are therefore a promising therapeutic approach. SHP2 contains two N-terminal tandem SH2 domains (N-SH2, C-SH2), a catalytic phosphatase domain and a C-terminal tail. SHP2 switches between “open” active and “closed” inactive forms due to autoinhibitory interactions between the N-SH2 domain and the phosphatase domain. Historically, phosphatases were deemed undruggable as there had been no advancements with active site inhibitors. We hypothesised that fragment screening would be highly applicable and amenable to this target to enable alternative means of inhibition through identification of allosteric binding sites. Here we describe the first reported fragment screen against SHP2. Using our fragment-based PyramidTM approach, screening was carried out on two constructs of SHP2; a closed autoinhibited C-terminal truncated form (phosphatase and both SH2 domains), as well as the phosphatase-only domain. A combination of screening methods such as X-ray crystallography and NMR were employed to identify fragment hits at multiple sites on SHP2, including the tunnel-like allosteric site reported by Chen et al, 2016. Initial fragment hits had affinities for SHP2 in the range of 1mM as measured by ITC. Binding of these hits was improved using structure-guided design to generate compounds which inhibit SHP2 phosphatase activity and are promising starting points for further optimization. Citation Format: Philip J. Day, Valerio Berdini, Juan Castro, Gianni Chessari, Thomas G. Davies, James E. Day, Satoshi Fukaya, Chris Hamlett, Keisha Hearn, Steve Hiscock, Rhian Holvey, Satoru Ito, Yasuo Kodama, Kenichi Matsuo, Yoko Nakatsuru, Nick Palmer, Amanda Price, Tadashi Shimamura, Jeffrey D.St. Denis, Nicola G. Wallis, Glyn Williams, Christopher N. Johnson. Fragment-based drug discovery to identify small molecule allosteric inhibitors of SHP2 [abstract]. In: Proceedings of the Annual Meeting of the American Association for Cancer Research 2020; 2020 Apr 27-28 and Jun 22-24. Philadelphia (PA): AACR; Cancer Res 2020;80(16 Suppl):Abstract nr 1039.