Protein-tyrosine phosphatase (PTP) 1B has been implicated in negative regulation of insulin action, although little is known of the ability of insulin to regulate PTP1B itself. The ability of insulin to regulate phosphorylation and activation of PTP1B was probed in vivo. Challenge with insulin in vivo provoked a transient, sharp increase in the phosphotyrosine content of PTP1B in fat and skeletal muscle that peaked within 15 min. Insulin stimulated a decline of 60--70% in PTP1B activity. In mouse adipocytes, the inhibition of PTP1B activity and increased tyrosine phosphorylation of the enzyme were blocked by the insulin receptor tyrosine kinase inhibitor AG1024. Phosphoserine content of PTP1B declined in response to insulin stimulation. Elevation of intracellular cyclic AMP provokes a sharp increase in PTP1B activity and leads to increased phosphorylation of serine residues and decreased tyrosine phosphorylation. Suppression of cyclic AMP levels or inhibition of protein kinase A leads to a sharp decline in PTP1B activity, a decrease in phosphoserine content, and an increase in PTP1B phosphotyrosine content. PTP1B appears to be a critical point for insulin and catecholamine counter-regulation.