Protein tyrosine phosphatase 1B (PTP-1B) is a ubiquitously expressed cytosolic phosphatase with the ability to dephosphorylate JAK2 and TYK2, and thereby down-regulate cytokine receptor signaling. Furthermore, PTP-1B levels are up-regulated in certain chronic myelogenous leukemia patients, which points to a potential role for PTP-1B in myeloid development. The results presented here show that the absence of PTP-1B affects murine myelopoiesis by modifying the ratio of monocytes to granulocytes in vivo. This bias toward monocytic development is at least in part due to a decreased threshold of response to CSF-1, because the PTP-1B ؊͞؊ bone marrow presents no abnormalities at the granulocytemonocyte progenitor level but produces significantly more monocytic colonies in the presence of CSF-1. This phenomenon is not due to an increase in receptor levels but rather to enhanced phosphorylation of the activation loop tyrosine. PTP-1B ؊͞؊ cells display increased inflammatory activity in vitro and in vivo through the constitutive up-regulation of activation markers as well as increased sensitivity to endotoxin. Collectively, our data indicate that PTP-1B is an important modulator of myeloid differentiation and macrophage activation in vivo and provide a demonstration of a physiological role for PTP-1B in immune regulation.hematopoiesis ͉ innate immunity ͉ myeloid progenitor cells P rotein tyrosine phosphatase 1B (PTP-1B; also known as PTPN1) is a ubiquitously expressed cytosolic phosphatase that is localized to the endoplasmic reticulum (1). PTP-1B Ϫ͞Ϫ mice were shown to be resistant to diet-induced diabetes and obesity (2-5), and the enzyme has been implicated in several metabolic pathways because of its ability to dephosphorylate and thereby down-regulate the activity of the insulin receptor (2, 3), epidermal growth factor receptor and platelet-derived growth factor receptor (6-8), insulin-like growth factor type I receptor (4, 9), and JAKs associated with cytokine family receptors, including leptin (5, 10) and growth hormone receptors (11). PTP-1B appears to show specificity toward JAK2 and TYK2 (12), and has been shown to regulate IFN signaling in fibroblasts (12). Despite the regulatory role in cytokine signaling, no immunological phenotype has been attributed to the PTP-1B-deficient mice to date.IL-3, granulocyte colony-stimulating factor (G-CSF), and granulocyte-monocyte colony-stimulating factor (GM-CSF) are cytokines that depend on JAK2 activity for signaling (13-15) and play important roles in the regulation of myeloid development (16). The receptor for another important myeloid cytokine, CSF-1, belongs to the class III receptor tyrosine kinase family together with the platelet-derived growth factor receptor (17), and it also activates TYK2 (18). Furthermore, it has been shown previously that PTP-1B protein levels are up-regulated in cell lines derived from chronic myelogenous leukemia patients (19)(20)(21). These observations led us to investigate the role of PTP-1B in hematopoiesis and, in particular, myelopoie...