In mammals, the growth and maturation of oocytes within growing follicles largely depends on ovarian granulosa cells (GCs) in response to gonadotropin stimulation. Many signals have been shown to regulate GC proliferation and apoptosis. However, whether the tyrosine phosphatase SHP2 is involved remains unclear. In this study, we identified the crucial roles of SHP2 in modulating GC proliferation and apoptosis. The production of both mature oocytes and pups was increased in mice with Shp2 specifically deleted in ovarian GCs via Fshr-Cre. Shp2 deletion simultaneously promoted GC proliferation and inhibited GC apoptosis. Furthermore, Shp2 deficiency promoted, while Shp2 overexpression inhibited, the proliferation of cultured primary mouse ovarian GCs and the human ovarian granulosa-like tumor cell line KGN in vitro. Shp2 deficiency promoted follicule-stimulating hormone (FSH)-activated phosphorylation of AKT in vivo. SHP2 deficiency reversed the inhibitory effect of hydrogen peroxide (H2O2) on AKT activation in KGN cells. H2O2 treatment promoted the interaction between SHP2 and the p85 subunit of PI3K in KGN cells. Therefore, SHP2 in GCs may act as a negative modulator to balance follicular development by suppressing PI3K/AKT signaling. The novel function of SHP2 in modulating proliferation and apoptosis of GCs provides a potential therapeutic target for the clinical treatment of follicle developmental dysfunction.