We have recently provided evidence for nicotine-induced complex formation between the alpha7 nicotinic acetylcholine receptor (nAChR) and the tyrosine-phosphorylated enzyme Janus kinase 2 (JAK2) that results in subsequent activation of phosphatidylinositol-3-kinase (PI-3-K) and Akt. Nicotine interaction with the alpha7 nAChR inhibits Abeta (1-42) interaction with the same receptor, and the Abeta (1-42)-induced apoptosis is prevented through nicotine-induced activation of JAK2. These effects can be shown by measuring markers of cytotoxicity, including the cleavage of the nuclear protein poly(ADP-ribose) polymerase (PARP), the induction of caspase 3, or cell viability. In this study, we found that 2-(3-pyridyl)-1-azabicyclo[3.2.2]nonane (TC-1698), a novel alpha7-selective agonist, exerts neuroprotective effects via activation of the JAK2/PI-3K cascade, which can be neutralized through activation of the angiotensin II (Ang II) AT(2) receptor. Vanadate not only augmented the TC-1698-induced tyrosine phosphorylation of JAK2 but also blocked the Ang II neutralization of TC-1698-induced neuroprotection against Abeta (1-42)-induced cleavage of PARP. Furthermore, when SHP-1 was neutralized via antisense transfection, the Ang II inhibition of TC-1698-induced neuroprotection against Abeta (1-42) was prevented. These results support the main hypothesis that states that JAK2 plays a central role in the nicotinic alpha7 receptor-induced activation of the JAK2-PI-3K cascade in PC12 cells, which ultimately contribute to nAChR-mediated neuroprotection. Ang II inhibits this pathway through the AT(2) receptor activation of the protein tyrosine phosphatase SHP-1. This study supports central and opposite roles for JAK2 and SHP-1 in the control of apoptosis and alpha7-mediated neuroprotection in PC12 cells.