Impaired insulin action is important in the pathophysiology of multiple metabolic abnormalities such as obesity and type 2 diabetes. Protein tyrosine phosphatase 1B (PTP1B) is considered a negative regulator of insulin signalling. This is best evidenced by studies on knockout mice showing that lack of PTP1B is associated with increased insulin sensitivity as well as resistance to obesity and in vitro studies whilst studies in animals and humans have given contradictory results. However, several studies support the notion that insulin signalling can be enhanced by the inhibition of PTP1B providing an attractive target for therapy against type 2 diabetes and obesity. In addition, recent genetic studies support the association between PTP1B with insulin resistance. The development of PTP1B inhibitors has already begun although it has become clear that is not easy to find both a selective, safe and effective PTP1B inhibitor. The objective of this paper is to review the current evidence of PTP1B in the pathophysiology of obesity, type 2 diabetes and cancer as well as in the treatment of these disorders.