Deregulation of the RAS GTPase cycle due to mutations in the three RAS genes is commonly associated with cancer development. Protein tyrosine phosphatase SHP2 promotes RAF-to-MAPK signaling pathway and is an essential factor in RAS-driven oncogenesis. Despite the emergence of SHP2 inhibitors for the treatment of cancers harbouring mutant KRAS, the mechanism underlying SHP2 activation of KRAS signaling remains unclear. Here we report tyrosyl-phosphorylation of endogenous RAS and demonstrate that KRAS phosphorylation via Src on Tyr32 and Tyr64 alters the conformation of switch I and II regions, which stalls multiple steps of the GTPase cycle and impairs binding to effectors. In contrast, SHP2 dephosphorylates KRAS, a process that is required to maintain dynamic canonical KRAS GTPase cycle. Notably, Src- and SHP2-mediated regulation of KRAS activity extends to oncogenic KRAS and the inhibition of SHP2 disrupts the phosphorylation cycle, shifting the equilibrium of the GTPase cycle towards the stalled 'dark state'.