Background. Stem cell factor (SCF) receptor c-Kit is recognized as a key signaling molecule, which transduces signals for the proliferation, differentiation and survival of stem cells. Binding of SCF to its receptor triggers transactivation, leading to the recruitment of kinases and phosphatases to the docking platforms of c-Kit catalytic domain. Tyrosine phosphatase-1 (Shp-1) deactivates/attenuates 'Kit' kinase activity. Whereas, Asp816Val mutation in the Kit activation loop transforms kinase domain to a constitutively activated state (switch off-to-on state), in a ligand-independent manner. This phenomenon completely abrogates negative regulation of Shp-1. To predict the possible molecular basis of interaction between c-Kit and Shp-1, we have performed an in silico protein-protein docking study between crystal structure of activated c-Kit (phosphorylated c-Kit) and full length crystal structure of Shp-2, a close structural counterpart of Shp-1. Findings. Study revealed a stretch of conserved amino acids (Lys818 to Ser821) in the Kit activation domain, which makes decisive H-bonds with N-sh2 and phosphotyrosine binding pocket residues of the phosphatase. These H-bonds may impose an inhibitory steric hindrance to the catalytic domain of c-Kit, there by blocking further interaction of the activation loop molecules with incoming kinases. We have also predicted a phosphotyrosine binding pocket in SH2 domains of Shp-1, which is found to be predominantly closer to a catalytic groove like structure in c-Kit kinase domain. Conclusions. This study predicts that crucial hydrogen bonding between N-sh2 domain of Shp-1 and Kit activation loop can modulate the negative regulation of c-Kit kinase by Shp-1. Thus, this finding is expected to play a significant role in designing suitable gain-of-function c-Kit mutants for inducing conditional proliferation of hematopoietic stem cells. © 2010 Mukhopadhyay et al; licensee BioMed Central Ltd.