Non-insulin-dependent diabetes mellitus (NIDDM) is a worldwide endocrine disorder afflicting persons of all races and age groups. At the molecular level NIDDM is often characterized by impaired insulin action on peripheral tissues. One important mechanism in regulating insulin signaling is mediated by protein tyrosine phosphatases, which may act on the insulin receptor itself and/or its substrates. Understanding the molecular events triggered by insulin has undoubtedly provided important clues in the treatment of NIDDM. In particular, the use of mouse models has helped us to focus on specific gene targets that are involved in the onset and progression of diabetes. Here we present an overview of the biochemical and genetic evidence supporting the role of five protein tyrosine phosphatases in insulin-mediated responses.