Articular cartilage phenotypic homeostasis is crucial for life-long joint function, but the underlying cellular and molecular mechanisms governing chondrocyte stability remain poorly understood. Here, we show that the protein tyrosine phosphatase SHP2 is differentially expressed in articular cartilage (AC) and growth plate cartilage (GPC) and that it negatively regulates cell proliferation and cartilage phenotypic program. Postnatal SHP2 deletion in Prg4+ AC chondrocytes increased articular cellularity and thickness, whereas SHP2 deletion in Acan+ pan-chondrocytes caused excessive GPC chondrocyte proliferation and led to joint malformation post-puberty. These observations were verified in mice and in cultured chondrocytes following treatment with the SHP2 PROTAC inhibitor SHP2D26. Further mechanistic studies indicated that SHP2 negatively regulates SOX9 stability and transcriptional activity by influencing SOX9 phosphorylation and promoting its proteasome degradation. In contrast to published work, SHP2 ablation in chondrocytes did not impact IL-1-evoked inflammation responses, and SHP2's negative regulation of SOX9 could be curtailed by genetic or chemical SHP2 inhibition, suggesting that manipulating SHP2 signaling has translational potential for diseases of cartilage dyshomeostasis.