The reprogrammed lipopolysaccharide (LPS) pathway has been reported to render patients more susceptible to the development of post-traumatic multiple organ dysfunction syndrome (MODS). To facilitate thorough understanding of this mechanism, a phosphoproteomic study was utilized to screen the potential signaling molecules. Interestingly, a truncated form of Src homology 2-domain-containing tyrosine phosphatase 1 (shp-1) emerged in human THP-1 macrophages sequentially treated with H2O2 and LPS and not with either of the treatments alone. Subsequent immunoblot analysis confirmed the cleavage of shp-1 and reduction of shp-1 activity in rat alveolar macrophages, mast cells, and neutrophils. Mechanistically, calpain is essential but not sufficient for shp-1 cleavage. In addition, shp-1 cleavage renders the activation of phosphatidylinositol 3-kinase (PI-3K)/nuclear factor-κB (NF-κB) and mechanistic target of rapamycin complex 1 (mTORC1) in macrophages, resulting in enhanced cytokine induced neutrophil chemoattractant (CINC) secretion, which is critical for neutrophil recruitment in MODS. On the other hand, shp-1 cleavage results in the activation of PI-3K/Akt, enhancing the survival of neutrophils. Collectively, these results highlight the cleavage of shp-1 as a critical event in reprogramming LPS pathway to promote both neutrophil recruitment and survival and provide a novel mechanistic framework for the investigation of the post-traumatic MODS.