Regorafenib is an inhibitor of multiple protein kinases which exerts antitumor and antimetastatic activities in metastatic colorectal cancer (CRC). SH2 domain-containing phosphatase 1 (SHP-1) is reported to have tumor suppressive potential because it acts as a negative regulator of p-STAT3(Tyr705) signaling. However, little is known about the mechanism regarding regorafenib affects SHP-1 tyrosine phosphatase activity and leads to apoptosis and tumor suppression in CRC. Here, we found that regorafenib triggered apoptotic cell death and significantly enhanced SHP-1 activity, which dramatically decreased the phosphorylated form of STAT3 at Tyr705 (p-STAT3(Tyr705)). Importantly, regorafenib augmented SHP-1 activity by direct disruption of the association between N-SH2 and catalytic PTP domain of SHP-1. Deletion of the N-SH2 domain (dN1) or point mutation (D61A) of SHP-1 blocked the effect of regorafenib-induced SHP-1 activity, growth inhibition and a decrease of p-STAT3(Tyr705) expression, suggesting that regorafenib triggers a conformational change in SHP-1 by relieving its autoinhibition. In vivo assay showed that regorafenib significantly inhibited xenograft growth and decreased p-STAT3(Tyr705) expression but induced higher SHP-1 activity. Collectively, regorafenib is a novel SHP-1 agonist exerts superior anti-tumor effects by enhancing SHP-1 activity that directly targets p-STAT3(Tyr705). Small molecule-enhancement of SHP-1 activity may be a promising therapeutic approach for CRC treatment.