As in other fields of biomedical research, the use of gene-targeted mice by homologous recombination in embryonic stem cells has provided important findings on the function of several members of the protein tyrosine phosphatase (PTP) family. For instance, the phenotypic characterization of knockout mice has been critical in understanding the sites of action of the related PTPs protein tyrosine phosphatase 1B (PTP1B) and T-cell-PTP (TC-PTP). By their increased insulin sensitivity and insulin receptor hyperphosphorylation, PTP1B null mice demonstrated a clear function for this enzyme as a negative regulator of insulin signaling. As well, TC-PTP has also been recently involved in insulin signaling in vitro. Importantly, the high identity in their amino acid sequences suggests that they must be examined simultaneously as targets of drug development. Indeed, they possess different as well as overlapping substrates, which suggest complementary and overlapping roles of both TC-PTP and PTP1B. Here, we review the function of PTP1B and TC-PTP in diabetes, obesity, and processes related to cancer.