The protein-tyrosine phosphatase 1B (PTP1B; PTPN1) is an important regulator of mammalian metabolism and also helps control signaling by growth factors, cytokines, and extracellular matrix. Gene knockout studies in mice established PTP1B as a key negative regulator of the insulin and leptin receptors. Experiments using PTP1B(-/-) fibroblast lines, dominant-negative mutants, or small interfering RNAs indicate that PTP1B contributes to dephosphorylation of the epidermal growth factor receptor and platelet-derived growth factor receptors as well. However, PTP1B also may have some positive (signal enhancing) roles downstream of some growth factor receptors and integrins. Previous studies indicated that PTP1B is overexpressed in a significant subset of breast and ovarian cancers, especially in those overexpressing HER2/Neu (HER2(+) tumors). However, experiments using tissue culture cells yield conflicting results on the effects of PTP1B in HER2 signaling, leaving the consequences of PTP1B overexpression for breast carcinogenesis unclear. To determine how PTP1B deficiency affects HER2-evoked breast tumorigenesis, we generated mouse mammary tumor virus (MMTV)-NeuNT transgenic mice lacking one or both alleles of PTP1B. Although heterozygous loss of PTP1B has no effect on tumorigenesis, homozygous PTP1B deficiency dramatically delays or prevents the onset of MMTV-NeuNT-evoked breast tumors. The effects of PTP1B deficiency correlate with defective extracellular signal-regulated kinase activation in preneoplastic mammary glands from compound mutant mice. In contrast, PTP1B deficiency has no effect on MMTV-polyoma middle T tumorigenesis. Our data raise the possibility that PTP1B inhibitors may be chemopreventative for some forms of breast cancer.