Type 2 or non-insulin-dependent diabetes mellitus (NIDDM) is reaching epidemic proportions in industrialized countries. Obesity is a major factor in this disease, since about 75% of obese individuals will develop type 2 diabetes. There is an urgent need to develop new therapies for these diseases. Recently, the protein tyrosine phosphatase PTP-1B has been shown to be a negative regulator of the insulin signaling pathway, suggesting that inhibitors of this enzyme may be beneficial in the treatment of type 2 diabetes. Mice lacking PTP-1B are resistant to both diabetes and obesity.