We have previously shown that the protein tyrosine phosphatase SHP-1 is highly expressed in CNS glia and is an important modulator of cytokine signaling. As such, mice genetically lacking SHP-1 display constitutive myelin abnormalities, severe virus-induced demyelinating disease, and defects in innate anti-viral responses in the CNS. In this study, we show the differential distribution of the SHP-1 promoter-specific transcripts and demonstrate that several cytokines significantly induce SHP-1 expression in CNS glia. Consistent with these cytokine effects, infection with a neurotropic virus both in vitro and in vivo up-regulates SHP-1 transcripts and protein in CNS cells. Using CNS glial cultures of gene knockout mice, we show that interferons-β and interferons-γ act through STAT-1 and interferon regulatory factor-1 to induce the SHP-1 promoter I transcripts. Conversely, interferons-β and IL-6 act through STAT-3 to induce SHP-1 promoter II transcripts. This study demonstrates that interferons and other cytokines associated with virus infections in the CNS can significantly induce the expression of SHP-1 through STAT-1/3 activity and provides a better understanding of the molecular mechanisms regulating cytokine-induced expression important for multiple homeostatic functions of SHP-1 in the CNS.