Although initially viewed as housekeeping enzymes, research over the last 15 years has revealed that the protein tyrosine phosphatases (PTPs) are critical regulators of tyrosine phosphorylation-dependent signaling events and may represent novel targets for therapeutic intervention in a variety of human diseases. In this review I will describe some of the key advances in the characterization of the structure, regulation and function of the prototypic PTP, PTP1B, and illustrate how our understanding of the properties of this enzyme has revealed principles that apply to the PTP family as a whole.