Protein tyrosine phosphatases (PTPs) contribute to a striking variety of human diseases, yet they remain vexingly difficult to inhibit with uncharged, cell-permeable molecules; no inhibitors of PTPs have been approved for clinical use. This study uses a broad set of biophysical analyses to evaluate the use of abietane-type diterpenoids, a biologically active class of phytometabolites with largely nonpolar structures, for the development of pharmaceutically relevant PTP inhibitors. Results of nuclear magnetic resonance analyses, mutational studies, and molecular dynamics simulations indicate that abietic acid can inhibit protein tyrosine phosphatase 1B, a negative regulator of insulin signaling and an elusive drug target, by binding to its active site in a non-substrate-like manner that stabilizes the catalytically essential WPD loop in an inactive conformation; detailed kinetic studies, in turn, show that minor changes in the structures of abietane-type diterpenoids (e.g., the addition of hydrogens) can improve potency (i.e., lower IC50) by 7-fold. These findings elucidate a previously uncharacterized mechanism of diterpenoid-mediated inhibition and suggest, more broadly, that abietane-type diterpenoids are a promising source of structurally diverse-and, intriguingly, microbially synthesizable-molecules on which to base the design of new PTP-inhibiting therapeutics.