Protein tyrosine phosphatases (PTPs) form a large family of enzymes that serve as key regulatory components in signal transduction pathways. Recent gene knockout studies in mice identify PTP1B as a promising target for anti-diabetes/obesity drug discovery. PTPs are also implicated in a wide variety of other disorders, including cancer. Significant progress has been made in identifying small molecules that simultaneously bind both the active site and a unique adjacent site that enables specific inhibition of individual PTP isoenzymes. As a consequence, there are compelling reasons to believe that PTP inhibitors may ultimately serve as powerful therapeutic weapons in our arsenal for battling human diseases.