The G protein-coupled sst2 somatostatin receptor is a critical negative regulator of cell proliferation. sstII prevents growth factor-induced cell proliferation through activation of the tyrosine phosphatase SHP-1 leading to induction of the cyclin-dependent kinase inhibitor p27(Kip1). Here, we investigate the signaling molecules linking sst2 to p27(Kip1). In Chinese hamster ovary-DG-44 cells stably expressing sst2 (CHO/sst2), the somatostatin analogue RC-160 transiently stimulates ERK2 activity and potentiates insulin-stimulated ERK2 activity. RC-160 also stimulates ERK2 activity in pancreatic acini isolated from normal mice, which endogenously express sst2, but has no effect in pancreatic acini derived from sst2 knock-out mice. RC-160-induced p27(Kip1) up-regulation and inhibition of insulin-dependent cell proliferation are both prevented by pretreatment of CHO/sst2 cells with the MEK1/2 inhibitor PD98059. In addition, using dominant negative mutants, we show that sst2-mediated ERK2 stimulation is dependent on the pertussis toxin-sensitive G(i/o) protein, the tyrosine kinase Src, both small G proteins Ras and Rap1, and the MEK kinase B-Raf but is independent of Raf-1. Phosphatidylinositol 3-kinase (PI3K) and both tyrosine phosphatases, SHP-1 and SHP-2, are required upstream of Ras and Rap1. Taken together, our results identify a novel mechanism whereby a G(i/o) protein-coupled receptor inhibits cell proliferation by stimulating ERK signaling via a SHP-1-SHP-2-PI3K/Ras-Rap1/B-Raf/MEK pathway.