In response to insulin, protein-tyrosine phosphatase 1B (PTPase 1B) dephosphorylates 95-and 160 -180-kDa tyrosine phosphorylated (PY) proteins (Kenner, K. A., Anyanwu, E., Olefsky, J. M., and Kusari, J. (1996) J. Biol. Chem. 271, 19810 -19816 Studies using mutant IRs demonstrated that IR autophosphorylation is necessary for the PTPase 1B-IR interaction. These results suggest that PTPase 1B complexes with the autophosphorylated insulin receptor in intact cells, either directly or within a complex involving additional proteins. The interaction requires multiple tyrosine phosphorylation sites within both the receptor and PTPase 1B.Insulin is a potent metabolic and growth-promoting hormone that has pleiotropic effects at the level of the cell and within the intact organism. Insulin acts on cells to stimulate glucose, protein, and lipid metabolism, as well as RNA and DNA synthesis, by modifying the activity of a variety of enzymes and transport processes (1). As a first step in initiating these responses, insulin binds to its plasma membrane receptor. The insulin receptor is a heterotetrameric protein consisting of two ␣ and two  subunits linked by disulfide bonds to form a -␣-␣- structure. After insulin binding, the insulin receptor undergoes autophosphorylation on tyrosine residues. Autophosphorylation increases the tyrosine kinase activity of the insulin receptor, which in turn phosphorylates one or more cellular substrates, leading to a cascade of secondary phosphorylation and dephosphorylation reactions (2).As the molecular mechanism of insulin action is defined with increasing clarity, so too is our appreciation of the central role played by protein tyrosine phosphorylation. Regulated tyrosine phosphorylation represents a balance of protein-tyrosine kinase (PTKase) 1 and protein-tyrosine phosphatase (PTPase) activities. To date, most attempts to assess the role of proteintyrosine phosphorylation in insulin signal transduction have focused on the action of kinases and thus furnish an incomplete picture of this dynamic process. PTPases can be used as probes to test the role of protein tyrosine phosphorylation, complementing studies performed on the PTKases.Extensive progress in the identification and characterization of PTPases has been made in recent years (3), partially as a result of our appreciation of the PTKases (4). PTPase 1B was the first PTPase to be isolated in homogeneous form and sequenced (5, 6). PTPase 1B possesses a catalytic domain characterized by the 11-amino acid sequence motif, (I/V)HCX-AGXXR(S/T)G. This motif contains cysteine (Cys 215 ) and arginine (Arg 221 ) residues critical for the catalytic activity of the enzyme (7-9). The cDNA sequences for human (10, 11) and rat (8) PTPase 1B predict a protein of 50 kDa with 435 and 432 amino acids, respectively. The conserved phosphatase domain of PTPase 1B is contained within the domain spanning residues 30 to 278. The COOH-terminal noncatalytic extension of the protein serves a regulatory function. The COOH-terminal 35 residues target the ...