Resistance to the biological action of insulin in its target tissues is a cardinal feature of non-insulin-dependent diabetes mellitus. Protein-tyrosine phosphatases (PTPases) have been postulated to play a key role in the regulation of the insulin action pathway, especially in skeletal muscle, the major site of insulin-mediated glucose disposal in vivo. To evaluate whether changes in the activity and/or abundance of candidate skeletal muscle PTPases is associated with severe resistance to insulin in an animal model, we measured PTPase enzyme activity and PTPase protein level by immunoblotting in subcellular fractions of skeletal muscle in lean (+/?), insulin-resistant obese (fa/fa), and diabetic (ZDF/Drt-fa/fa) Zucker rats. Using a phosphotyrosylmyelin basic protein substrate, the solubilized-particulate fraction PTPase activity was increased by 65% and 74% (P < .05) and in vitro dephosphorylation of a recombinant rat insulin receptor kinase domain was increased by 104% and 114% in obese and diabetic animals, respectively (P < .01). These changes in PTPase activity were associated with an increase in specific immunoreactivity of leukocyte common antigen-related PTPase ([LAR] by 42% and 50%), PTPase 1B (by 61% and 69%), and the SHZ domain containing PTPase (SH-PTP2) (by 44% and 48%) in the solubilized-particulate fraction of obese and diabetic animals, respectively (P < .05). In diabetic muscle, increased SH-PTP2 abundance was also associated with a shift of SH-PTP2 to a plasma membrane component, which may have important consequences for the activation of this enzyme in the insulin-resistant state. These results provide evidence that specific PTPases play a role in the insulin resistance of this genetic model of obesity and non-insulin-dependent diabetes.