Sustained activation of extracellular signal-regulated kinase (ERK) drives pathologies caused by mutations in fibroblast growth factor receptors (FGFRs). We previously identified the inositol phosphatase SHIP2 (also known as INPPL1) as an FGFR-interacting protein and a target of the tyrosine kinase activities of FGFR1, FGFR3, and FGFR4. We report that loss of SHIP2 converted FGF-mediated sustained ERK activation into a transient signal and rescued cell phenotypes triggered by pathologic FGFR-ERK signaling. Mutant forms of SHIP2 lacking phosphoinositide phosphatase activity still associated with FGFRs and did not prevent FGF-induced sustained ERK activation, demonstrating that the adaptor rather than the catalytic activity of SHIP2 was required. SHIP2 recruited Src family kinases to the FGFRs, which promoted FGFR-mediated phosphorylation and assembly of protein complexes that relayed signaling to ERK. SHIP2 interacted with FGFRs, was phosphorylated by active FGFRs, and promoted FGFR-ERK signaling at the level of phosphorylation of the adaptor FRS2 and recruitment of the tyrosine phosphatase PTPN11. Thus, SHIP2 is an essential component of canonical FGF-FGFR signal transduction and a potential therapeutic target in FGFR-related disorders.