The insulin-like growth factor type I (IGF-I) receptor (IGF- IR), activated by its ligands IGF-I and IGF-II, can initiate several signal transduction pathways that mediate suppression of apoptosis, proliferation, differentiation, and transformation. Here we investigated the regulation of IGF-IR activation and function by protein tyrosine phosphatase 1beta (PTP-1B). Coexpression of PTP-1B with a beta-chain construct of the IGF-IR (betaWT) inhibited IGF-IR kinase activity in fission yeast Schizosaccharomyces pombe, in COS cells, and in IGF-IR- deficient fibroblasts. In both spontaneously immortalized and simian virus 40 T antigen-transformed embryonic fibroblast cell lines derived from PTP-1B knockout mice, IGF-I induced higher levels of IGF-IR autophosphorylation and kinase activity than were induced in PTP-1B-expressing control cells. PTP-1B- deficient cells exhibited enhanced IGF-I-mediated protection from apoptosis in response to serum withdrawal or etoposide killing, as well as enhanced plating efficiency and IGF-I- mediated motility. Reexpression of PTP-1B in spontaneously immortalized fibroblasts resulted in decreased IGF-IR and AKT activation, as well as decreased protection from apoptosis and decreased motility. These findings demonstrate that PTP-1B can regulate IGF-IR kinase activity and function and that loss of PTP-1B can enhance IGF-I-mediated cell survival, growth, and motility in transformed cells.