Our previous studies have indicated an essential role of p52shc in mediating IGF-I activation of MAPK in smooth muscle cells (SMC). However, the role of the p66 isoform of shc in IGF-I signal transduction is unclear. In the current study, two approaches were employed to investigate the role of p66shc in mediating IGF-I signaling. Knockdown p66shc by small interfering RNA enhanced IGF-I-stimulated p52shc tyrosine phosphorylation and growth factor receptor-bound protein-2 (Grb2) association, resulting in increased IGF-I-dependent MAPK activation. This was associated with enhanced IGF-I-stimulated cell proliferation. In contrast, knockdown of p66shc did not affect IGF-I-stimulated IGF-I receptor tyrosine phosphorylation. Overexpression of p66shc impaired IGF-I-stimulated p52shc tyrosine phosphorylation and p52shc-Grb2 association. In addition, IGF-I-dependent MAPK activation was also impaired, and SMC proliferation in response to IGF-I was inhibited. IGF-I-dependent cell migration was enhanced by p66shc knockdown and attenuated by p66shc overexpression. Mechanistic studies indicated that p66shc inhibited IGF-I signal transduction via competitively inhibiting the binding of Src homology 2 domain-containing protein tyrosine phosphatase-2 (SHP-2) to SHP substrate-1 (SHPS-1), leading to the disruption of SHPS-1/SHP-2/Src/p52shc complex formation, an event that has been shown previously to be essential for p52shc phosphorylation and Grb2 recruitment. These findings indicate that p66shc functions to negatively regulate the formation of a signaling complex that is required for p52shc activation in response to IGF-I, thus leading to attenuation of IGF-I-stimulated cell proliferation and migration.