Many studies have illustrated that the production of reactive oxygen species (ROS) is important for optimal tyrosine phosphorylation and signaling in response to diverse stimuli. Protein-tyrosine phosphatases (PTPs), which are important regulators of signal transduction, are exquisitely sensitive to inhibition after generation of ROS, and reversible oxidation is becoming recognized as a general physiological mechanism for regulation of PTP function. Thus, production of ROS facilitates a tyrosine phosphorylation-dependent cellular signaling response by transiently inactivating those PTPs that normally suppress the signal. In this study, we have explored the importance of reversible PTP oxidation in the signaling response to insulin. Using a modified ingel PTP assay, we show that stimulation of cells with insulin resulted in the rapid and transient oxidation and inhibition of two distinct PTPs, which we have identified as PTP1B and TC45, the 45-kDa spliced variant of the T cell protein-tyrosine phosphatase. We investigated further the role of TC45 as a regulator of insulin signaling by combining RNA interference and the use of substrate-trapping mutants. We have shown that TC45 is an inhibitor of insulin signaling, recognizing the -subunit of the insulin receptor as a substrate. The data also suggest that this strategy, using ligand-induced oxidation to tag specific PTPs and using interference RNA and substrate-trapping mutants to illustrate their role as regulators of particular signal transduction pathways, may be applied broadly across the PTP family to explore function.The reversible phosphorylation of tyrosyl residues in proteins, catalyzed by the coordinated actions of protein tyrosine kinases and protein-tyrosine phosphatases (PTPs), 1 is of paramount importance to the control of such fundamental physiological functions as cell proliferation, differentiation, survival, metabolism, and motility (1, 2). The phosphorylation of a target protein alters its function, including changes in enzymatic activity or its ability to associate with other proteins. In response to a stimulus, such as a growth factor or hormone, multiple phosphorylation and dephosphorylation reactions are coordinated in signal transduction cascades that culminate in the physiological response (3, 4). A characterization of the enzymes responsible for the regulation of protein tyrosine phosphorylation in vivo will be essential for an understanding of the control of signal transduction under normal and pathophysiological conditions and would be expected to identify important new targets for therapeutic intervention in human disease. We are focusing on this process from the perspective of the PTP family of enzymes.A substantial body of information has been accumulated to describe the role of protein tyrosine kinases in the regulation of signal transduction. In contrast, we are only now beginning to appreciate in mechanistic detail the role of some members of the PTP family in fine-tuning the signaling response to extracellular stimuli. Analysis ...