Protein tyrosine phosphatase 1B (PTP1B) negatively regulates insulin signaling in part by dephosphorylating key tyrosine residues within the regulatory domain of the beta-subunit of the insulin receptor (IR), thereby attenuating receptor tyrosine kinase activity. Inhibition of PTP1B is therefore anticipated to improve insulin resistance and has recently become the focus of discovery efforts aimed at identifying new drugs to treat type II diabetes. We previously reported that the tripeptide Ac-Asp-Tyr(SO(3)H)-Nle-NH(2) is a surprisingly effective inhibitor of PTP1B (K(i) = 5 microM). With the goal of improving the stability and potency of this lead, as well as attenuating its peptidic character, an analogue program was undertaken. Specific elements of the initial phase of this program included replacement of the N- and C-termini with non-amino acid components, modification of the tyrosine subunit, and replacement of the tyrosine sulfate with other potential phosphate mimics. The most potent analogue arising from this effort was triacid 71, which inhibits PTP1B competitively with a K(i) = 0.22 microM without inhibiting SHP-2 or LAR at concentrations up to 100 microM. Overall, the inhibitors generated in this work showed little or no enhancement of insulin signaling in cellular assays. However, potential prodrug triester 70 did induce enhancements in 2-deoxyglucose uptake into two different cell lines with concomitant augmentation of the tyrosine phosphorylation levels of insulin-signaling molecules. Key elements of the overall SAR reported herein include confirmation of the effectiveness and remarkable PTP1B-specificity of the novel tyrosine phosphate bioisostere, O-carboxymethyl salicylic acid; demonstration that the tyrosine skeleton is optimal relative to closely related structures; replacement of the p-1 aspartic acid with phenylalanine with little effect on activity; and demonstration that inhibitory activity can be maintained in the absence of an N-terminal carboxylic acid. An X-ray cocrystal structure of an analogue bearing a neutral N-terminus (69) bound to PTP1B is reported that confirms a mode of binding similar to that of peptidic substrates.