Tumor associated macrophages (TAMs) in tumor microenvironment can interact with tumor cells and are related to tumor progression. However, the mechanisms that drive the anti-tumor functions of TAMs are not fully understood. The Src homology 2 domain-containing tyrosine phosphatase 2 (Shp2) has been reported to have tumor-suppressing roles in colorectal cancer (CRC). However, a role for Shp2 on TAMs in CRC has not been studied. Here we report that in CRC, Shp2 expression on TAMs is negatively associated with liver metastasis. TAMs require Shp2 for their anti-tumor functions in a cell-cell co-culture system and a mouse model of CRC. Mechanistically, absence of Shp2 on TAMs induces their polarization toward M2 phenotype through the activation of p-STAT3 and inhibition of p-NF-κB p65. The findings of our study imply that Shp2 is a key factor in the tumor microenvironment to facilitate the TAMs’ tumor-suppressing functions in colorectal cancer.