The endoplasmic reticulum-localized non-receptor protein-tyrosine phosphatase 1B (PTP1B) is associated with oncogenic, metabolic, and cytokine-related signaling and functionally targets multiple receptor tyrosine kinases (RTKs) for dephosphorylation. Loss of PTP1B activity leads to enhanced ligand-dependent biological activity of the Met RTK among others. Here, we demonstrate that knockdown of PTP1B or expression of a PTP1B trapping aspartic acid-to-alanine substitution (D/A) mutant delayed ligand-induced degradation of the Met and EGF RTKs. Loss of PTP1B function abrogated trafficking of Met and EGF receptor to Rab5- and phosphatidylinositol 3-phosphate (Pl3P)-positive early endosomes and subsequent trafficking through the degradative pathway. Under these conditions, internalization of the Met and EGF receptors was unaltered, suggesting a block at the level of early endosome formation. We show that the N-ethylmaleimide-sensitive factor (NSF), an essential component of the vesicle fusion machinery, was hyperphosphorylated in PTP1B knockdown or PTP1B D/A-expressing cells and was a target for PTP1B. NSF knockdown phenocopied PTP1B knockdown, demonstrating a mechanism through which PTP1B regulates endocytic trafficking. Finally, we show that PTP1B dephosphorylated NSF and that this interaction was required for physiological RTK trafficking and appropriate attenuation of downstream signaling.