The non-receptor tyrosine phosphatase SHP2, encoded by PTPN11, plays an indispensable role in tumors driven by oncogenic KRAS mutations, which frequently occur in colorectal cancer. Here, PCC0208023, a potent SHP2 allosteric inhibitor, was synthesized to evaluate its inhibitory effects against the SHP2 enzyme, and the KRAS mutant colorectal cancer in vitro and in vivo, and its impart on the RAS/MAPK pathway. Consistent with an allosteric mode of inhibition, PCC0208023 can non-competitively inhibit the activity of full-length SHP2 enzyme, but lacks activity against the free catalytic domain of SHP2. Furthermore, PCC0208023 inhibited the proliferation of KRAS mutation-driven human colorectal cancer cells by inhibiting the RAS/MAPK signaling pathway in vitro. Importantly, PCC0208023 displayed good anti-tumor efficacy against KRAS-driven LS180 and HCT116 xenograft models in nude mice with the decreased Ki67 and p-ERK level, and increased cleaved caspase-3 expression in tumors. Interestingly, PCC0208023 maintained high levels in LS180 tumors within 24 h after administration and was mainly distributed in both intestines and lungs. Molecular docking studies revealed a higher affinity of PCC0208023 with key residues in the SHP2 allosteric pocket than RMC-4550. PCC0208023 deserves further optimization to identify additional low-toxic and potent SHP2 allosteric inhibitors with novel scaffolds for the treatment of patients with KRAS mutation-positive colorectal cancer.