Activating mutations of PTPN11 (encoding the SHP2 phosphatase) are associated with Noonan syndrome, childhood leukemias, and sporadic solid tumors. Virtual screening combined with experimental assays was performed to identify inhibitors of SHP2 from a database of natural products. This effort led to the identification of cryptotanshinone as an inhibitor of SHP2. Cryptotanshinone inhibited SHP2 with an IC50 of 22.50 μM. Fluorescence titration experiments confirmed that it directly bound to SHP2. Enzymatic kinetic analyses showed that cryptotanshinone was a mixed-type and irreversible inhibitor. This drug was further verified for its ability to block SHP2-mediated cell signaling and cellular functions. Furthermore, mouse myeloid progenitors and patient leukemic cells with the activating mutation E76K in PTPN11 were found to be sensitive to this inhibitor. Since cryptotanshinone is used to treat cardiovascular diseases in Asian countries, this drug has a potential to be used directly or to be further developed to treat PTPN11-associated malignancies.