Many hormone or growth factor receptors signal via the activation of protein-tyrosine kinases and phosphatases. Alteration of the phosphorylation state of tyrosine residues in certain proteins can directly regulate enzyme activity or cause formation of protein complexes necessary for transducing intracellular signals. Genetic and biochemical evidence also implicates protein-tyrosine phosphatases in several disease processes, including negative regulation of insulin receptor signaling at the level of the insulin receptor and perhaps in signaling at the IRS-1 level. The expression of protein tyrosine phosphatase-1B (PTP1B) is elevated in muscle and adipose tissue in insulin-resistant states both in man and rodents suggesting that PTP1B may play a role in the insulin-resistant state associated with diabetes and obesity. As described in this unit, PTP1B activity can be determined with the small molecule substrate, p-nitrophenyl phosphate (pNPP), in which the cleavage of the phosphate results in production of p-nitrophenol (pNP) and an increase in absorbance at 405 nm. Alternatively, PTP1B activity can be measured as described using model phosphotyrosyl-containing peptide substrates in which the release of free phosphate from the peptide is determined using a malachite green colorimetric assay.