Protein Tyrosine Phosphatase 1B (PTP1B), an important negative regulator of insulin signaling, is thought to be an attractive therapeutic target for insulin resistance and type 2 diabetes. For the aim of screening PTP1B expression down-regulators, we established the drug screening cellular model based on transcriptional regulation of PTP1B. In this study, the promoter sequences of PTP1B were cloned into pGL3B-neo vector containing luciferase gene and neomycin resistance gene. The recombinant reporter gene vector pGL3B-neo /PTP1B was transfected into CV1 cells and therefore stable cell line, namely SPTP1B, was obtained. With the cell-based reporter gene assay, we detected more than one hundred compounds in microtiter wells. In the screening process, the compound CM107 which had extracted from the traditional Chinese medicinal herbs was identified to repress the activity of PTP1B promoter significantly in mode of dose-dependence.