Obese human subjects have increased protein-tyrosine phosphatase (PTPase) activity in adipose tissue that can dephosphorylate and inactivate the insulin receptor kinase. To extend these findings to skeletal muscle, we measured PTPase activity in the skeletal muscle particulate fraction and cytosol from a series of lean controls, insulin-resistant obese (body mass index > 30) nondiabetic subjects, and obese individuals with non-insulin-dependent diabetes. PTPase activities in subcellular fractions from the nondiabetic obese subjects were increased to 140-170% of the level in lean controls (P < 0.05). In contrast, PTPase activity in both fractions from the obese subjects with non-insulin-dependent diabetes was significantly decreased to 39% of the level in controls (P < 0.05). By immunoblot analysis, leukocyte antigen related (LAR) and protein-tyrosine phosphatase 1B had the greatest increase (threefold) in the particulate fraction from obese, nondiabetic subjects, and immunodepletion of this fraction using an affinity-purified antibody directed at the cytoplasmic domain of leukocyte antigen related normalized the PTPase activity when compared to the activity from control subjects. These findings provide further support for negative regulation of insulin action by specific PTPases in the pathogenesis of insulin resistance in human obesity, while other regulatory mechanisms may be operative in the diabetic state.