In the present study, we tested the hypothesis that variability in the protein tyrosine phosphatase-1B (PTP-1B) gene is associated with type 2 diabetes. Using single-strand conformational polymorphism analysis, we examined cDNA of PTP-1B from 56 insulin-resistant patients with type 2 diabetes as well as cDNA from 56 obese patients. Four silent variants, (NT CGA-->CGG) R199R, (NT CCC-->CCT) P303P, 3'UTR+104insG, and 3'UTR+86T-->G, and one missense variant, P387L, were found. Subsequent analysis on genomic DNA revealed two intron variants, IVS9+57C-->T and IVS9+58G-->A, and two missense variants, G381S and T420M. The G381S and 3'UTR+104insG insertion variants were not associated with type 2 diabetes. In an association study, the P387L variant was found in 14 of 527 type 2 diabetic subjects (allelic frequency 1.4%, 0.4-2.4 CI) and in 5 of 542 glucose-tolerant control subjects (allelic frequency 0.5%, CI 0.1-1.1), showing a significant association to type 2 diabetes (P = 0.036). In vitro, p34 cell division cycle (p34(cdc2)) kinase-directed incorporation of [gamma-(32)P]ATP was reduced in a mutant peptide compared with native peptide (387P: 100% vs. 387L: 28.4 +/- 5.8%; P = 0.0012). In summary, a rare P387L variant of the PTP-1B gene is associated with a 3.7 (CI 1.26-10.93, P = 0.02) genotype relative risk of type 2 diabetes in the examined population of Danish Caucasian subjects and results in impaired in vitro serine phosphorylation of the PTP-1B peptide.