Objective: The tyrosine phosphatase SHP2 has a dual role in cancer initiation and progression in a tissue type-dependent manner. Several studies have linked SHP2 to the aggressive behavior of breast cancer cells and poorer outcomes in people with cancer. Nevertheless, the mechanistic details of how SHP2 promotes breast cancer progression remain largely undefined. Methods: The relationship between SHP2 expression and the prognosis of patients with breast cancer was investigated by using the TCGA and GEO databases. The expression of SHP2 in breast cancer tissues was analyzed by immunohistochemistry. CRISPR/Cas9 technology was used to generate SHP2-knockout breast cancer cells. Cell-counting kit-8, colony formation, cell cycle, and EdU incorporation assays, as well as a tumor xenograft model were used to examine the function of SHP2 in breast cancer proliferation. Quantitative RT-PCR, west blotting, immunofluorescence staining, and ubiquitination assays were used to explore the molecular mechanism through which SHP2 regulates breast cancer proliferation. Results: High SHP2 expression is correlated with poor prognosis in patients with breast cancer. SHP2 is required for the proliferation of breast cancer cellsin vitro and tumor growthin vivo through regulation of Cyclin D1 abundance, thereby accelerating cell cycle progression. Notably, SHP2 modulates the ubiquitin–proteasome-dependent degradation of Cyclin D1viathe PI3K/AKT/GSK3β signaling pathway. SHP2 knockout attenuates the activation of PI3K/AKT signaling and causes the dephosphorylation and resultant activation of GSK3β. GSK3β then mediates phosphorylation of Cyclin D1 at threonine 286, thereby promoting the translocation of Cyclin D1 from the nucleus to the cytoplasm and facilitating Cyclin D1 degradation through the ubiquitin–proteasome system. Conclusions: Our study uncovered the mechanism through which SHP2 regulates breast cancer proliferation. SHP2 may therefore potentially serve as a therapeutic target for breast cancer.