The SH2 containing 5' inositolphosphatases (SHIP and SHIP2) dephosphorylate 3'-phosphorylated PtdIns on the 5' position, decreasing intracellular levels of PtdIns 3,4,5-P3. In the current study, we investigated the role of SHIP in insulin and PDGF signaling by expressing wild-type (WT) and catalytically inactive SHIPIP in 3T3-L1 adipocytes, utilizing adenoviral infection. Insulin and PDGF both stimulated tyrosine phosphorylation of SHIP-WT and of SHIPIP, and tyrosine phosphorylation of SHIP associated proteins increased after ligand stimulation. Tyrosine-phosphorylated PDGFR, IR and IRS-1 all immunoprecipitated with SHIP. Expression of WT and IP SHIP did not affect tyrosine phosphorylation of either the insulin or the PDGF receptor, or the expression of IRS-1 and Shc proteins. Both SHIP-WT and SHIPIP blocked insulin and PDGF-induced MAPK and MEK phosphorylation as well as, GTP-bound Ras activity, suggesting that the catalytic activity of SHIP is not necessary for these effects. SHIP associated with Shc upon ligand stimulation, indicating that the SHIP-Shc association is phosphorylation dependent. This association was primarily between the SHIP-SH2 domain and the phosphorylated tyrosine residues of Shc, as no association was observed when the 3YF-Shc mutant was co-expressed with SHIP. The Shc•Grb2 association was not compromised by SHIP expression, despite complete inhibition of the Ras/MAPK pathway. Interestingly, SOS protein normally found in Grb2 complexes was markedly reduced in SHIP expressing cells, whereas the displaced SOS was recovered when the post Grb2-IP supernatants were blotted with anti-SOS antibody. Thus, SHIP competes SOS away from Shc-Grb2. In summary, 1) SHIP-WT and SHIPIP expression inhibit insulin and PDGF stimulated Ras, MEK and MAPK activities 2) SHIP associates with tyrosine phosphorylated Shc, and the proline rich sequences in SHIP associate with Grb2 and titrate out SOS to form Shc•Grb2•SHIP complexes. 3) Dissociation of SOS from the Shc•Grb2 complex inhibits Ras GTP loading leading to decreased signaling through the MAPK pathway.