Protein S-nitrosylation mediated by cellular nitric oxide (NO) plays a primary role in executing biological functions in cGMP-independent NO signaling. Although S-nitrosylation appears similar to Cys oxidation induced by reactive oxygen species, the molecular mechanism and biological consequence remain unclear. We investigated the structural process of S-nitrosylation of protein-tyrosine phosphatase 1B (PTP1B). We treated PTP1B with various NO donors, including S-nitrosothiol reagents and compound-releasing NO radicals, to produce site-specific Cys S-nitrosylation identified using advanced mass spectrometry (MS) techniques. Quantitative MS showed that the active site Cys-215 was the primary residue susceptible to S-nitrosylation. The crystal structure of NO donor-reacted PTP1B at 2.6 A resolution revealed that the S-NO state at Cys-215 had no discernible irreversibly oxidized forms, whereas other Cys residues remained in their free thiol states. We further demonstrated that S-nitrosylation of the Cys-215 residue protected PTP1B from subsequent H(2)O(2)-induced irreversible oxidation. Increasing the level of cellular NO by pretreating cells with an NO donor or by activating ectopically expressed NO synthase inhibited reactive oxygen species-induced irreversible oxidation of endogenous PTP1B. These findings suggest that S-nitrosylation might prevent PTPs from permanent inactivation caused by oxidative stress.