Previously we have shown that tyrosine 718 of ASK1 when phosphorylated is critical for SOCS1 binding and SOCS1-mediated degradation of ASK1. However, the kinase and phosphatase responsible for phosphorylation and dephosphorylation of ASK1 at Tyr-718 are unknown. In this study, we identified JAK2 and SHP2 as a Tyr-718-specific kinase and phosphatase, respectively. Interferon-gamma (IFN-gamma) induced degradation of ASK1 in normal but not in SOCS1-KO endothelial cells (EC). IFN-gamma-induced tyrosine phosphorylation of ASK1 at Tyr-718 was blocked by a JAK2-specific inhibitor. IFN-gamma enhanced the association between JAK2 and ASK1, and the ASK1-JAK2 complex was labile and was stabilized by the proteasomal inhibitor MG132. Furthermore, JAK2, but not JAK1, directly bound to and phosphorylated ASK1 at Tyr-718, leading to an enhanced association of ASK1 with SOCS1 and subsequent ASK1 degradation. Next, we showed that overexpression of the SH2-containing protein-tyrosine phosphatase-2 (SHP2) augmented, whereas a phosphatase-inactive mutant of SHP2 inhibited, TNF-induced ASK1 dephosphorylation. SHP2 associated with ASK1 in response to tumor necrosis factor in EC. An SHP-2 substrate-trapping mutant formed a complex with tyrosine-phosphorylated ASK1, suggesting that ASK1 is a direct SHP2 substrate. Moreover, SHP2 wild type, but not a catalytically inactive mutant, dissociated SOCS1 from ASK1. IFN-gamma-induced ASK1 Tyr(P)-718 was enhanced in mouse EC deficient in SHP2 (SHP2-KO). In contrast, tumor necrosis factor-induced dephosphorylation of ASK1 at Tyr(P)-718 and activation of ASK1-JNK signaling, as well as EC apoptosis, are significantly reduced in SHP2-KO EC. Our data suggest that JAK2-SOCS1 and SHP2 reciprocally regulate ASK1 phosphorylation and stability in response to cytokines.