Protein-tyrosine phosphatases (PTPases) play a key role in maintaining the steady-state tyrosine phosphorylation of the insulin receptor (IR) and its substrate proteins such as insulin receptor substrate 1 (IRS-1). However, the PTPase(s) that inactivate IR and IRS-1 under physiological conditions remain unidentified. Here, we analyze the subcellular distribution in rat adipocytes of several PTPases thought to be involved in the counterregulation of insulin signaling. We found that the transmembrane enzymes, protein-tyrosine phosphatase (PTP)-alpha and leukocyte common antigen-related (LAR), were detected predominantly in the plasma membrane and to a lesser extent in the heavy microsomes, a distribution similar to that of insulin receptor. PTP-1B and IRS-1 were present in light microsomes and cytosol, whereas SHPTP2/Syp was exclusively cytosolic. Insulin induced a redistribution of PTP-alpha from the plasma membrane to the heavy microsomes in a parallel fashion with the receptor. The distribution of PTP-1B in the light microsomes from resting adipocytes was similar to that of IRS-1 as determined by sucrose velocity gradient fractionation. Analysis of the catalytic activity of partially purified rat adipocyte PTP-alpha and LAR and recombinant PTP-1B showed that all three PTPases dephosphorylate IR. When a mix of IR/IRS-1 was used as a substrate, PTP-1B was particularly effective in dephosphorylating IRS-1. Considering that IR and IRS-1 can be dephosphorylated in internal membrane compartments from rat adipocytes (Kublaoui, B., Lee, J., and Pilch, P.F. (1995) J. Biol. Chem. 270, 59-65) and that PTP-alpha and PTP-1B are the respective PTPases in these fractions, we conclude that these PTPases are responsible for the counterregulation of insulin signaling there, whereas both LAR and PTP-alpha may act upon cell surface insulin receptors.