It has been suggested that protein tyrosine phosphatase 1B (PTP1B) inhibitors might be a therapeutic target for the treatment of type 2 diabetes and obesity. A bioassay-guided phytochemical study of the EtOAc extract of the stem bark of Erythrina addisoniae (Leguminosae) resulted in the identification of a new PTP1B inhibitory compound, 5,2',4'-trihydroxy-6-(gamma,gamma-dimethylallyl)-2''',2'''-dimethyldihydropyrano[5''',6''']isoflavanone ( 6), along with five known prenylated isoflavonoids, orientanol E ( 1), senegalensin ( 2), warangalone ( 3), warangalone 4'-methyl ether ( 4) and 2,3-dihydroauriculatin ( 5). Compounds 1, 5 and 6 inhibited PTP1B with IC (50) values ranging from 2.6 +/- 0.5 to 10.1 +/- 0.3 microM. Our results indicate that hydroxylation at both 2'- and 4'-positions in the B-ring and cyclization between a hydroxy group at C-7 and one of the prenyl groups at C-6 or C-8 in the A-ring may be important for activity. Thus, compounds 5 and 6 could be a new class of natural PTP1B inhibitors.