OBJECTIVE—The protein tyrosine phosphatase PTP1B is a negative regulator of insulin signaling; consequently, mice deficient in PTP1B are hypersensitive to insulin. Because PTP1B−/− mice have diminished fat stores, the extent to which PTP1B directly regulates glucose homeostasis is unclear. Previously, we showed that brain-specific PTP1B−/− mice are protected against high-fat diet–induced obesity and glucose intolerance, whereas muscle-specific PTP1B−/− mice have increased insulin sensitivity independent of changes in adiposity. Here we studied the role of liver PTP1B in glucose homeostasis and lipid metabolism. RESEARCH DESIGN AND METHODS—We analyzed body mass/adiposity, insulin sensitivity, glucose tolerance, and lipid metabolism in liver-specific PTP1B−/− and PTP1Bfl/fl control mice, fed a chow or high-fat diet. RESULTS—Compared with normal littermates, liver-specific PTP1B−/− mice exhibit improved glucose homeostasis and lipid profiles, independent of changes in adiposity. Liver-specific PTP1B−/− mice have increased hepatic insulin signaling, decreased expression of gluconeogenic genes PEPCK and G-6-Pase, enhanced insulin-induced suppression of hepatic glucose production, and improved glucose tolerance. Liver-specific PTP1B−/− mice exhibit decreased triglyceride and cholesterol levels and diminished expression of lipogenic genes SREBPs, FAS, and ACC. Liver-specific PTP1B deletion also protects against high-fat diet–induced endoplasmic reticulum stress response in vivo, as evidenced by decreased phosphorylation of p38MAPK, JNK, PERK, and eIF2α and lower expression of the transcription factors C/EBP homologous protein and spliced X box-binding protein 1. CONCLUSIONS—Liver PTP1B plays an important role in glucose and lipid metabolism, independent of alterations in adiposity. Inhibition of PTP1B in peripheral tissues may be useful for the treatment of metabolic syndrome and reduction of cardiovascular risk in addition to diabetes.