The protein tyrosine kinase (PTK) receptors and cytosolic signalling proteins as well as the protein tyrosine phosphatases (PTP) have important roles in regulation of growth and function of the benign and malignant prostate gland. Here we studied the expression levels and functions of the protein tyrosine phosphatase SHP-1 in prostate cancer cell lines and in benign and malignant human prostatic tissues. We found that SHP-1 is expressed at a high level in LNCaP prostate cancer cells compared to PC-3 cells. Silencing of SHP-1 expression with siRNA in LNCaP cells led to an increased rate of proliferation as measured by thymidine incorporation, whereas in PC3 cells in which SHP1 was overexpressed by transient transfection proliferation rate was decreased. We also examined SHP-1 expression in prostate cancer by immunohistochemical staining of tissue microarrays comprising tumor specimens from 122 prostate cancer patients. We found an inverse correlation between SHP-1 staining intensity and the time to biochemical recurrence as measured by a rise in the serum level of prostate-specific antigen (PSA) in prostate cancer patients. In conclusion, our results suggest that a low level of SHP-1 expression in prostate cancer cells is associated with high proliferation rate and with an increased risk of biochemical recurrence after radical prostatectomy for localized prostate cancer.