Juvenile myelomonocytic leukemia (JMML) is a lethal disease of young children characterized by hypersensitivity of hematopoietic progenitors to granulocyte-macrophage colony-stimulating factor (GM-CSF). Mutations in PTPN11, which encodes the protein tyrosine phosphatase Shp-2, are common in JMML. We hypothesized that PTPN11 mutations induce hypersensitivity of hematopoietic progenitors to GM-CSF and confer increased GM-CSF-stimulated phospho-extracellular signal-regulated kinase (Erk) levels. To test this hypothesis, the wild-type (WT) and 3 mutant Ptpn11 cDNAs (E76K, D61V, and D61Y) were transduced into murine bone marrow cells to examine GM-CSF-stimulated granulocyte-macrophage colony-forming unit (CFU-GM) growth, macrophage progenitor proliferation, and activation of the Ras signaling pathway. Expression of the Shp-2 mutants induced progenitor cell hypersensitivity to GM-CSF compared with cells transduced with vector alone or WT Shp-2. Macrophage progenitors expressing the Shp-2 mutants displayed both basal and GM-CSF-stimulated hyperproliferation compared with cells transduced with vector alone or WT Shp-2. Consistently, macrophage progenitors transduced with the Shp-2 mutants demonstrated constitutively elevated phospho-Erk levels and sustained activation of phospho-Erk following GM-CSF stimulation compared with vector alone or WT Shp-2. These data support the hypothesis that PTPN11 mutations induce hematopoietic progenitor hypersensitivity to GM-CSF due to hyperactivation of the Ras signaling axis and provide a basis for the GM-CSF signaling pathway as a target for rational drug design in JMML.