Previous investigations demonstrated that protein tyrosine phosphatase, receptor type, O (PTPRO) acts as a tumor suppressor in liver cancer; however, little is known about its role in liver inflammation. Thus, we investigated the role of PTPRO in fulminant hepatitis (FH) using a Con A–induced mouse model. Significantly more severe liver damage, but attenuated inflammation, was detected in PTPRO-knockout (KO) mice, and PTPRO deficiency could confer this phenotype to wild-type mice in bone marrow transplantation. Moreover, hepatocytes with PTPRO depletion were more sensitive to TNF-α–induced apoptosis, and secretion of cytokines was significantly decreased in both T and NK/NKT cells and led to marked impairment of NF-κB activation. Intriguingly, wild-type and PTPRO-KO cells responded equally to TNF-α in activation of IKK, but NF-κB activation was clearly decreased in PTPRO-KO cells. PTPRO associated with ErbB2, and loss of PTPRO potentiated activation of the ErbB2/Akt/GSK-3β/β-catenin cascade. Increased β-catenin formed a complex with NF-κB and attenuated its nuclear translocation and activation. Importantly, in humans, PTPRO was much decreased in FH, and this was associated with enhanced β-catenin accumulation but reduced IFN-γ secretion. Taken together, our study identified a novel PTPRO/ErbB2/Akt/GSK-3β/β-catenin/NF-κB axis in FH, which suggests that PTPRO may have therapeutic potential in this liver disease.