Abstract: Src homology 2 domain-containing protein tyrosine phosphatase (SHP2) is a non-receptor protein tyrosine phosphatase encoded by the Ptpn11 gene, which regulates cell growth, differentiation and apoptosis through activation of the RAS-ERK signaling pathway, and participates in the PD-1/PD-L1 pathway governing immune surveillance. It has been recognized as a breakthrough antitumor therapeutic target. However, inhibitors targeting the active site of SHP2 lack druggability potential due to their low selectivity and poor bioavailability. Recently, the allosteric inhibitors that stabilized the inactive conformation of SHP2 while addressing druggability issues have entered clinical trials, providing clinical proof for the druggable target of SHP2. This review summarizes the structure and function of SHP2 and design and discovery of its small molecule inhibitors, with a focus on the study of structure-activity relationships (SAR) and recent advances in representative SHP2 inhibitors as a new approach to the development of antitumor drugs.