Type 1 diabetes (T1D) is the result of an autoimmune assault against the insulin-producing pancreatic b-cells, where chronic local inflammation (insulitis) leads to b-cell destruction. T cells and macrophages infiltrate into islets early in T1D pathogenesis. These immune cells secrete cytokines that lead to the production of reactive oxygen species (ROS) and T-cell invasion and activation. Cytokine-signaling pathways are very tightly regulated by protein tyrosine phosphatases (PTPs) to prevent excessive activation. Here, we demonstrate that pancreata from NOD mice with islet infiltration have enhanced oxidation/inactivation of PTPs and STAT1 signaling compared with NOD mice that do not have insulitis. Inactivation of PTPs with sodium orthovanadate in human and rodent islets and b-cells leads to increased activation of interferon signaling and chemokine production mediated by STAT1 phosphorylation. Furthermore, this exacerbated STAT1 activation-induced cell death in islets was prevented by overexpression of the suppressor of cytokine signaling-1 or inactivation of the BH3-only protein Bim. Together our data provide a mechanism by which PTP inactivation induces signaling in pancreatic islets that results in increased expression of inflammatory genes and exacerbated insulitis.Type 1 diabetes (T1D) is caused by progressive loss of pancreatic b-cells due to an autoimmune assault. Local inflammation and proinflammatory cytokines, particularly interferons (IFNs), play an important role in b-cell loss (1,2). IFN-g signal transduction involves activation of the tyrosine kinases Janus kinase (JAK) 1 and JAK2 that phosphorylate STAT1. These then dimerize, translocate to the nucleus, and bind g-activated sites of a diverse array of genes. Blocking activation of this transcriptional pathway protects islets from immune destruction (3-5). These data indicate that excessive activation of JAK/STAT signaling in islets during the inflammatory process contributes to b-cell dysfunction and death. Cytokine signaling results in the upregulation and release of factors by b-cells, such as chemokines, that attract immune cells and amplify the inflammatory process.Protein tyrosine phosphatases (PTPs) are a large superfamily of enzymes that dephosphorylate tyrosine phosphorylated proteins to oppose the actions of protein tyrosine kinases (6,7). PTPs play an important role in the development of both forms of diabetes (8). The architecture and low thiol pKa of the Cys residue in the active site of PTPs renders these proteins highly susceptible to oxidation by reactive oxygen species (ROS) (6,8). ROSmediated oxidation of the PTP active site Cys inhibits PTP activity and prevents substrate binding. Recent studies have established that PTP oxidation occurs in vivo under physiological and pathological conditions such as inflammation (6,8,9).The total serum antioxidant levels of patients with prediabetes and patients with T1D are reduced compared with age-matched controls (10,11). Furthermore, ROS and oxidative stress have been linked to b-cell c...