KRAS is the most frequently mutated human oncogene, and KRAS inhibition has been a longtime goal. Recently, inhibitors were developed that bind KRASG12C-GDP and react with Cys-12 (G12C-Is). Using new affinity reagents to monitor KRASG12C activation and inhibitor engagement, we found that an SHP2 inhibitor (SHP2-I) increases KRAS-GDP occupancy, enhancing G12C-I efficacy. The SHP2-I abrogated RTK feedback signaling and adaptive resistance to G12C-Is in vitro, in xenografts, and in syngeneic KRASG12C-mutant pancreatic ductal adenocarcinoma (PDAC) and non–small cell lung cancer (NSCLC). SHP2-I/G12C-I combination evoked favorable but tumor site–specific changes in the immune microenvironment, decreasing myeloid suppressor cells, increasing CD8+ T cells, and sensitizing tumors to PD-1 blockade. Experiments using cells expressing inhibitor-resistant SHP2 showed that SHP2 inhibition in PDAC cells is required for PDAC regression and remodeling of the immune microenvironment but revealed direct inhibitory effects on tumor angiogenesis and vascularity. Our results demonstrate that SHP2-I/G12C-I combinations confer a substantial survival benefit in PDAC and NSCLC and identify additional potential combination strategies.