Outside-in integrin alphaIIbbeta3 signaling is required for normal platelet thrombus formation and is triggered by c-Src activation through an unknown mechanism. In this study, we demonstrate an essential role for protein-tyrosine phosphatase (PTP)-1B in this process. In resting platelets, c-Src forms a complex with alphaIIbbeta3 and Csk, which phosphorylates c-Src tyrosine 529 to maintain c-Src autoinhibition. Fibrinogen binding to alphaIIbbeta3 triggers PTP-1B recruitment to the alphaIIbbeta3-c-Src-Csk complex in a manner that is dependent on c-Src and specific tyrosine (tyrosine 152 and 153) and proline (proline 309 and 310) residues in PTP-1B. Studies of PTP-1B-deficient mouse platelets indicate that PTP-1B is required for fibrinogen-dependent Csk dissociation from alphaIIbbeta3, dephosphorylation of c-Src tyrosine 529, and c-Src activation. Furthermore, PTP-1B-deficient platelets are defective in outside-in alphaIIbbeta3 signaling in vitro as manifested by poor spreading on fibrinogen and decreased clot retraction, and they exhibit ineffective Ca2+ signaling and thrombus formation in vivo. Thus, PTP-1B is an essential positive regulator of the initiation of outside-in alphaIIbbeta3 signaling in platelets.