Monocytes play a vital role in the development of cardiovascular diseases. Type 2 diabetes mellitus (T2DM) is a major CVD risk factor, and T2DM-induced aberrant activation and enhanced migration of monocytes is a vital pathomechanism that leads to atherogenesis. We recently reported the upregulation of SHP-2 phosphatase expression in mediating the VEGF resistance of T2DM patient-derived monocytes or methylglyoxal- (MG, a glucose metabolite and advanced glycation end product (AGE) precursor) treated monocytes. However, the exact mechanisms leading to SHP-2 upregulation in hyperglycemic monocytes are unknown. Since inflammation and accumulation of AGEs is a hallmark of T2DM, we hypothesise that inflammation and AGE-RAGE (Receptor-for-AGEs) signalling drive SHP-2 expression in monocytes and blockade of these pathways will repress SHP-2 function. Indeed, monocytes from T2DM patients revealed an elevated SHP-2 expression. Under normoglycemic conditions, the serum from T2DM patients strongly induced SHP-2 expression, indicating that the T2DM serum contains critical factors that directly regulate SHP-2 expression. Activation of pro-inflammatory TNFα signalling cascade drove SHP-2 expression in monocytes. In line with this, linear regression analysis revealed a significant positive correlation between TNFα expression and SHP-2 transcript levels in T2DM monocytes. Monocytes exposed to MG or AGE mimetic AGE-BSA, revealed an elevated SHP-2 expression and co-treatment with an NFκB inhibitor or genetic inhibition of p65 reversed it. The pharmacological inhibition of RAGE was sufficient to block MG- or AGE-BSA-induced SHP-2 expression and activity. Confirming the importance of RAGE-NFκB signalling in regulating SHP-2 expression, the elevated binding of NFκB to the SHP-2 promoter—induced by MG or AGE-BSA—was reversed by RAGE and NFκB inhibition. Besides, we detected elevated RAGE levels in human and murine T2DM monocytes and monocytes exposed to MG or AGE-BSA. Importantly, MG and AGE-BSA treatment of non-T2DM monocytes phenocopied the aberrant pro-migratory phenotype of T2DM monocytes, which was reversed entirely by either SHP-2- or RAGE inhibition. In conclusion, these findings suggest a new therapeutic approach to prevent accelerated atherosclerosis in T2DM patients since inhibiting the RAGE-NFκB-SHP-2 axis impeded the T2DM-driven, SHP-2-dependent monocyte activation.