Reactive oxygen species (ROS) regulate diverse cellular functions by triggering signal transduction events, such as Src and mitogen-activated protein (MAP) kinases. Here, we report the role of caveolin-1 and Src homology 2 domain-containing protein tyrosine phosphatase 2 (SHP-2) in H2O 2-induced signaling pathway in brain astrocytes. H2O 2-mediated oxidative stress induced phosphorylation of caveolin-1 and association between p-caveolin-1 and SHP-2. SHP-2 specifically bound to wild-type caveolin-1 similarly to c-Src tyrosine kinase (CSK), but not to phosphorylation-deficient mutant of caveolin-1 (Y14A), and interfered with complex formation between caveolin-1 and CSK. In the presence of CSK siRNA, binding between caveolin-1 and SHP-2 was enhanced by H2O2 treatment, which led to reduced Src phosphorylation at tyrosine (Tyr) 530 and enhanced Src phosphorylation at Tyr 419. In contrast, siRNA targeting of SHP-2 facilitated H2O2-mediated interaction between caveolin-1 and CSK and enhanced Src phosphorylation at Tyr 530, leading to subsequent decrease in Src downstream signaling, such as focal adhesion kinase (FAK) and extracellular signal-related kinase (ERK). Our results collectively indicate that SHP-2 alters Src kinase activity by interfering with the complex formation between CSK and phosphotyrosine caveolin-1 in the presence of H 2O2, thus functions as a positive regulator in Src signaling under oxidative stress in brain astrocytes.