Mice heterozygous for IR and IRS-1 deficiency provide a model of polygenic type 2 diabetes in which early onset, genetically programmed insulin resistance leads to diabetes. PTP1B dephosphorylates tyrosine residues in IR and possibly IRS proteins, thereby inhibiting insulin signaling. Mice lacking PTP1B are lean and have increased insulin sensitivity. To determine if PTP1B could modify polygenic insulin resistance, we crossed PTP1B-/- mice to mice with double heterozygous deficiency of IR and IRS1 (DHet). DHet mice weighed slightly less than wild type mice and exhibited severe insulin resistance and hyperglycemia, with ~35% of DHet males developing diabetes by 9-10 weeks of age. In DHet mice with PTP1B deficiency, body weight was similar to DHet mice. However, absence of PTP1B in DHet markedly improved glucose tolerance and insulin sensitivity at 10-11 weeks of age and reduced the incidence of diabetes and hyperplastic pancreatic islets at 6 months of age. Insulin-stimulated phosphorylation of IR, IRS proteins, Akt/PKB, GSK3beta and p70S6K was impaired in muscle and liver of DHet mice and was differentially improved, by PTP1B deficiency. In addition, increased PEPCK expression in liver of DHet was reversed by PTP1B deficiency. In summary, PTP1B deficiency reduces insulin resistance and hyperglycemia without altering body weight in a model of polygenic type 2 diabetes. Thus, even in the setting of high genetic risk for diabetes, reducing PTP1B is partially protective, further demonstrating its attractiveness as a target for prevention and treatment of type 2 diabetes.