Protein-tyrosine phosphatase 1B (PTP1B) has been implicated in the negative regulation of insulin signaling. We previously demonstrated that light-induced tyrosine phosphorylation of the retinal insulin receptor (IR) results in the activation of phosphoinositide 3-kinase/Akt survival pathway in rod photoreceptor cells. The molecular mechanism behind light-induced activation of IR is not known. We investigated the in vivo mechanism of IR activation and found that PTP1B activity in dark-adapted retinas was significantly higher than in light-adapted retinas. We made a novel finding in this study that the light-dependent regulation of PTP1B activity is signaled through photobleaching of rhodopsin. Conditional deletion of PTP1B in rod photoreceptors by the Cre-loxP system resulted in enhanced IR signaling. Further PTP1B activity negatively regulated the neuroprotective survival signaling in the retina. One of the challenging questions in the retina research is how mutations in human rhodopsin gene slowly disable and eventually disrupt photoreceptor functions. Our studies suggest that a defect in the photobleaching of rhodopsin and mutation in rhodopsin gene enhances the activity of PTP1B, and this activated activity could down-regulate the IR survival signaling. Our studies suggest that PTP1B antagonists could be potential therapeutic agents to treat stress-induced photoreceptor degenerations and provide further evidence that rhodopsin photoexcitation may trigger signaling events alternative to the classic phototransduction.