Metabolic syndrome and type 2 diabetes are complex disorders that are associated with obesity, aging, and genetic predisposition. The increasing prevalence of metabolic abnormalities worldwide presents a serious public health problem, with rates of obesity and diabetes reaching unprecedented levels. A common feature of these disorders is the development of insulin resistance, resulting in decreased insulin-stimulated glucose uptake, failure to suppress hepatic glucose production, and accumulation of hepatic lipid. Recent studies in mice have shown that deficiency of the non-receptor protein tyrosine phosphatase, PTP1B, in liver leads to a host of improvements in metabolic parameters, including improved hepatic insulin sensitivity, reduced liver triglycerides, lower serum and hepatic cholesterol levels, and protection against high-fat diet-induced endoplasmic reticulum (ER) stress. Based on these promising studies, PTP1B inhibitors may prove to be a valuable therapeutic tool in the fight against metabolic syndrome and its associated comorbidities. In this review, the role of PTP1B in hepatic insulin sensitivity, hepatic lipid accumulation, and ER stress are discussed.