Previous studies in this laboratory have shown that the SH‐2 domain‐containing protein tyrosine phosphatase SHP‐1 is expressed in CNS glia and functions to modulate cytokine activities in these cells. The present study demonstrates that SHP‐1 is expressed within multiple regions of the CNS in vivo, especially in white matter. Interestingly, we show that mice genetically lacking in SHP‐1 (motheaten mice) in the CNS displayed dysmyelination. We therefore examined the expression of SHP‐1 in the myelin‐forming oligodendrocytes. Oligodendrocytes present in either mixed glial cultures or pure cultures expressed high levels of SHP‐1 in the cytoplasm of cell bodies and processes. Oligodendrocytes isolated from motheaten mice did not express SHP‐1. To test possible functions for SHP‐1 in oligodendrocytes in controlling cytokine signaling, we compared the responsiveness of oligodendrocytes isolated from either motheaten or normal littermate mice with IL‐6. IL‐6 induced higher levels of STAT3 phosphorylation and STAT3‐responsive c‐fos gene expression in pure oligodendrocyte cultures of motheaten compared with normal littermate mice. These studies demonstrate that oligodendrocytes express SHP‐1 and that SHP‐1 functions to control IL‐6 signaling. SHP‐1 may therefore be a critical regulator of oligodendrocyte differentiation in response to IL‐6 family cytokines. Further, these findings may relate to dysmyelination in mice lacking SHP‐1. GLIA 29:376–385, 2000. © 2000 Wiley‐Liss, Inc.