Protein tyrosine phosphatases (PTPs) play a critical role in regulating insulin action in part through dephosphorylation of the active (autophosphorylated) form of the insulin receptor (IRK) and attenuation of its tyrosine kinase activity. Following insulin binding the activated IRK is rapidly internalized into the endosomal apparatus, a major site at which the IRK is dephosphorylated in vivo. Studies in rat liver suggest a complex regulatory process whereby PTPs may act, via selective IRK tyrosine dephosphorylation, to modulate IRK activity in both a positive and negative manner. Use of peroxovanadium (pV) compounds, shown to be powerful PTP inhibitors, has been critical in delineating a close relationship between the IRK and its associated PTP(s) in vivo. Indeed the in vivo administration of pV compounds effected activation of IRK in parallel with an inhibition of IRK-associated PTP activity. This process was accompanied by a lowering of blood glucose levels in both normal and diabetic rats thus implicating the IRK-associated PTP(s) as a suitable target for defining a novel class of insulin mimetic agents. Identification of the physiologically relevant IRK-associated PTP(s) should facilitate the development of drugs suitable for managing diabetes mellitus.