Bile acid (BA) biosynthesis is tightly controlled by intrahepatic negative feedback signaling elicited by BA binding to farnesoid X receptor (FXR) and also by enterohepatic communication involving ileal BA reabsorption and FGF15/19 secretion. However, how these pathways are coordinated is poorly understood. We show here that nonreceptor tyrosine phosphatase Shp2 is a critical player that couples and regulates the intrahepatic and enterohepatic signals for repression of BA synthesis. Ablating Shp2 in hepatocytes suppressed signal relay from FGFR4, receptor for FGF15/19, and attenuated BA activation of FXR signaling, resulting in elevation of systemic BA levels and chronic hepatobiliary disorders in mice. Acting immediately downstream of FGFR4, Shp2 associates with FRS2α and promotes the receptor activation and signal relay to several pathways. These results elucidate a molecular mechanism for the control of BA homeostasis by Shp2 through the orchestration of multiple signals in hepatocytes.