Protein tyrosine phosphatases (PTPs) constitute a large family of enzymes that play key roles in cell signaling. Deregulation of PTP activity results in aberrant tyrosine phosphorylation, which has been linked to the etiology of several human diseases, including cancer. Since phosphate removal by the PTPs can both enhance and antagonize cellular signaling, it is essential to elucidate the physiological context in which PTPs operate. Two powerful proteomic approaches have been developed to rapidly establish the exact functional roles for every PTP, both in normal cellular physiology and in pathogenic conditions. In the first, an affinity-based substrate-trapping approach has been employed for PTP substrate identification. Identification and characterization of specific PTP-substrate interactions will associate functions with PTP as well as implicate PTP to specific signaling pathways. In the second, a number of activity-based PTP probes have been developed that can provide a direct readout of the functional state of the PTPs in complex proteomes. The ability to profile the entire PTP family on the basis of changes in their activity is expected to yield new functional insights into pathways regulated by the PTPs and contribute to the discovery of PTPs as novel therapeutic targets. Effective application of these proteomic techniques will accelerate the functional characterization of PTPs, thereby facilitating our understanding of PTPs in cell signaling and in diseases.