Changes in expression of PTP1B, the prototypic protein tyrosine phosphatase, have been associated with various human diseases; however, the mechanisms by which PTP1B expression is regulated have not been defined. We have identified an enhancer sequence within the PTP1B promoter which serves as a binding site for the transcription factor Y box‐binding protein‐1 (YB‐1). Overexpression of YB‐1 resulted in increased levels of PTP1B. Furthermore, depletion of YB‐1 protein, by expression of a specific antisense construct, led to an∼ 70% decrease in expression of PTP1B, but no change in the level of its closest relative, TC‐PTP. Expression of antisense YB‐1 resulted in increased sensitivity to insulin and enhanced signaling through the cytokine receptor gp130, which was suppressed by re‐expression of PTP1B. Finally, we observed a correlation between the expression of PTP1B and that of YB‐1 in cancer cell lines and an animal model of type II diabetes. Our data reveal an important role for YB‐1 as a regulator of PTP1B expression, and further highlight PTP1B as a critical regulator of insulin‐and cytokine‐mediated signal transduction.