Insulin resistance is a key pathological feature of type 2 diabetes and is characterized by defects in signaling by the insulin receptor (IR) protein tyrosine kinase. The inhibition of protein tyrosine phosphatases (PTPs) that antagonize IR signaling may provide a means for enhancing the insulin response and alleviating insulin resistance. The prototypic phosphotyrosine‐specific phosphatase PTP1B dephosphorylates the IR and attenuates insulin signaling in muscle and liver. Mice that are deficient for PTP1B exhibit improved glucose homeostasis in diet and genetic models of insulin resistance and type 2 diabetes. The phosphatase TCPTP shares 72% catalytic domain sequence identity with PTP1B and has also been implicated in IR regulation. Despite their high degree of similarity, PTP1B and TCPTP act together in vitro and in vivo to regulate insulin signaling and glucose homeostasis. This review highlights their capacity to act specifically and nonredundantly in cellular signaling, describes their roles in IR regulation and glucose homeostasis, and discusses their potential as drug targets for the enhancement of IR phosphorylation and insulin sensitivity in type 2 diabetes.