Cutaneous T-cell lymphoma (CTCL) comprises distinct and often progressive stages of skin involvement by patches, plaques, and tumors. We have previously demonstrated that CTCL-derived malignant T-cell lines display loss of a tumor suppressor SHP-1 tyrosine phosphatase because of epigenetic silencing of its gene. The silencing is induced by an activated phosphorylated (p)-STAT3 transcription factor in cooperation with DNA methyltransferase 1 (DNMT1), the key member of the epigenetic gene silencing machinery. To determine at which stage of CTCL the loss of SHP-1 occurs and how it correlates with the expression of (p)-STAT3 and DNMT1, we examined by immunohistochemistry 47 formalin-fixed skin biopsies from various stages of CTCL. Six pairs of the biopsies were obtained before and after CTCL progression at the patch or plaque and tumor stage, respectively. In 5 of these pairs, we identified loss of SHP-1 expression in atypical lymphocytes at the tumor stage; less prominent SHP-1 loss was noted in 3 biopsies from the earlier stage. The SHP-1 loss was also observed in 5 of 6 tumor, 12 of 18 plaque, and only 2 of 11 patch stages in patients with single biopsies. The expression of (p)-STAT3 and DNMT1 could be identified in almost all cases in at least a subset of the lesional cells. Based on these findings, we postulate that expression of (p)-STAT3 and DNMT1 occurs at the early stages of CTCL, and that this expression alone seems insufficient to induce loss of SHP-1 expression. In turn, SHP-1 loss correlates with, and may contribute to, progression of CTCL.