We have shown previously that protein tyrosine phosphatase (PTP) 1B interacts with insulin receptor and negatively regulates insulin signalling by an N-terminal binding domain [Dadke, Kusari and Chernoff (2000) J. Biol. Chem. 275, 23642-23647] and it also negatively regulates integrin signalling through a proline-rich region present in the C-terminus [Liu, Hill and Chernoff (1996) J. Biol. Chem. 271, 31290-31295; Liu, Sells and Chernoff (1998) Curr. Biol. 8, 173-176]. Here we show that PTP1B mutants that are defective in Src homology 3 domain binding fully retain the ability to inhibit insulin signalling, whereas mutants defective in insulin-receptor binding fully retain the ability to inhibit integrin signalling. In contrast, both the C-terminal proline-rich region and the tandem tyrosine residues present in the N-terminal region are required for the activation of Src family kinases. These data show that PTP1B can independently regulate insulin and integrin signals, and that Src might represent a convergence point for regulating signal transduction by this phosphatase.