Protein tyrosine phosphatase 1B (PTP1B) is a negative regulator of insulin signaling and a therapeutic target for type 2 diabetes. The purpose of this study was to evaluate the differences in insulin sensitivity between neonate and adult hepatocytes lacking PTP1B. Immortalized neonatal hepatocytes and primary neonatal and adult hepatocytes have been generated from PTP1B(-/-) and wild-type mice. PTP1B deficiency in immortalized neonatal hepatocytes prolonged insulin-induced tyrosine phosphorylation of the insulin receptor (IR) and IR substrates (IRS) -1, -2 compared with wild-type control cells. Endogenous IR and IRS-2 were down-regulated, whereas IRS-1 was up-regulated in PTP1B(-/-) neonatal hepatocytes and livers of PTP1B(-/-) neonates. Insulin-induced activation of phosphatidylinositol 3-kinase/Akt pathway was prolonged in PTP1B(-/-) immortalized neonatal hepatocytes. However, insulin sensitivity was comparable to wild-type hepatocytes. Rescue of PTP1B in deficient cells suppressed the prolonged insulin signaling, whereas RNA interference in wild-type cells promoted prolonged signaling. In primary neonatal PTP1B(-/-) hepatocytes, insulin prolonged the inhibition of gluconeogenic mRNAs, but the sensitivity to this inhibition was similar to wild-type cells. By contrast, in adult PTP1B-deficient livers, p85alpha was down-regulated compared with the wild type. Moreover, primary hepatocytes from adult PTP1B(-/-) mice displayed enhanced Akt phosphorylation and a more pronounced inhibition of gluconeogenic mRNAs than wild-type cells. Hepatic insulin sensitivity due to PTP1B deficiency is acquired through postnatal development. Thus, changes in IR and IRS-2 expression and in the balance between regulatory and catalytic subunits of phosphatidylinositol 3-kinase are necessary to achieve insulin sensitization in adult PTP1B(-/-) hepatocytes.