Protein tyrosine phosphatases (PTPs) are a large family of enzymes that catalyze the hydrolytic removal of the phosphoryl group from phosphotyrosyl (pY) proteins. PTP inhibitors provide potential treatment of human diseases/conditions such as diabetes and obesity as well as useful tools for studying the function of PTPs in signaling pathways. In this work, we have shown that certain aryl-substituted aldehydes act as reversible, slow-binding inhibitors of modest potency against PTP1B, SHP-1, and a dual-specificity phosphatase, VHR. Attachment of the tripeptide Gly-Glu-Glu to the para position of cinnamaldehyde resulted in an inhibitor (Cinn-GEE) of substantially increased potency against all three enzymes (e.g., K(I) = 5.4 microM against PTP1B). The mechanism of inhibition was investigated using Cinn-GEE specifically labeled with (13)C at the aldehyde carbon and (1)H-(13)C heteronuclear single-quantum coherence spectroscopy. While Cinn-GEE alone showed a single cross-peak at delta 9.64 ((1)H) and delta 201 ((13)C), the PTP1B/Cinn-GEE complex showed three distinct cross-peaks at delta 7.6-7.8 ((1)H) and 130-137 ((13)C). Mutation of the catalytic cysteine (Cys-215 in PTP1B) into alanine had no effect on the cross-peaks, whereas mutation of a conserved active-site arginine (Arg-221 in PTP1B) to alanine abolished all three cross-peaks. Similar experiments with Cinn-GEE that had been labeled with (13)C at the benzylic position revealed a change in the hybridization state (from sp(2) to sp(3)) for the benzylic carbon as a result of binding to PTP1B. These results rule out the possibility of a free aldehyde, aldehyde hydrate, or hemithioacetal as the enzyme-bound inhibitor form. Instead, the data are consistent with the formation of an enamine between the aldehyde group of the inhibitor and the guanidine group of Arg-221 in the PTP1B active site. These aldehydes may provide a general core structure that can be further developed into highly potent and specific PTP inhibitors.