Protein tyrosine phosphatase 1B (PTP1B) dephosphorylates receptors tyrosine kinase and acts as a molecular brake on insulin signaling pathway. Conditions of metabolic dysfunction increase PTP1B, when deletion of PTP1B protects against metabolic disorders by increasing insulin signaling. Although vascular insulin signaling contributes to the control of glucose disposal, little is known regarding the direct role of PTP1B in the control of endothelial function. We hypothesized that metabolic dysfunctions increase PTP1B expression in endothelial cells and that PTP1B deletion prevents endothelial dysfunction in situation of diminished insulin secretion. Type I diabetes (T1DM) was induced in wild-type (WT) and PTP1B-deficient mice (KO) with streptozotocin (STZ) injection. After 28 days of T1DM, KO mice exhibited a similar reduction in body weight and plasma insulin levels and a comparable increase in glycemia (WT: 384 ± 20 vs. Ko: 432 ± 29 mg/dL), cholesterol and triglycerides, as WT mice. T1DM increased PTP1B expression and impaired endothelial NO-dependent relaxation, in mouse aorta. PTP1B deletion did not affect baseline endothelial function, but preserved endothelium-dependent relaxation, in T1DM mice. NO synthase inhibition with L-NAME abolished endothelial relaxation in control and T1DM WT mice, whereas L-NAME and the cyclooxygenases inhibitor indomethacin were required to abolish endothelium relaxation in T1DM KO mice. PTP1B deletion increased COX-2 expression and PGI2 levels, in mouse aorta and plasma respectively, in T1DM mice. In parallel, simulation of diabetic conditions increased PTP1B expression and knockdown of PTP1B increased COX-2 but not COX-1 expression, in primary human aortic endothelial cells. Taken together these data indicate that deletion of PTP1B protected endothelial function by compensating the reduction in NO bioavailability by increasing COX-2-mediated release of the vasodilator prostanoid PGI2, in T1DM mice.