Protein tyrosine phosphatase 1B (PTP1B) is a negative regulator of tyrosine kinase growth factor signaling. To assess the importance of PTP1B in the balance between death and survival in the liver, we have developed immortalized neonatal hepatocyte cell lines lacking (PTP1B(-/-)) or overexpressing (PTP1B(+/+PTP1B)) PTP1B. Early activation of caspase-3 occurred in PTP1B(+/+PTP1B) hepatocytes but was nearly abolished in PTP1B(-/-) cells. At the molecular level, PTP1B overexpression/deficiency altered the balance of pro-(Bim) and anti-(Bcl-x(L)) apoptotic members of the Bcl-2 family upon serum withdrawal. Likewise, cytosolic cytochrome C increased rapidly in PTP1B(+/+PTP1B) hepatocytes whereas it was retained in the mitochondria of PTP1B(-/-) cells. DNA fragmentation and the increase of apoptotic cells induced by serum withdrawal in wild-type (PTP1B(+/+)) hepatocytes were absent in PTP1B(-/-) cells. Conversely, overexpression of PTP1B accelerated DNA laddering and increased the number of apoptotic cells. In serum-deprived PTP1B(+/+PTP1B) hepatocytes, a rapid entry of Foxo1 into the nucleus and an earlier activation of caspase-8 was observed. However, both events were suppressed in PTP1B(-/-) hepatocytes. Moreover, PTP1B deficiency conferred resistance to apoptosis induced by activation of Fas and constitutively active Foxo1. Rescue of PTP 1B in deficient hepatocytes recovered the phenotype of wild-type cells whereas reduction of PTP1B by siRNA suppressed apoptosis. Our results reveal a unique role for PTP1B as a mediator of the apoptotic pathways triggered by trophic factors withdrawal in hepatocytes. This novel mechanism may represent an important target in the design of therapeutic strategies for human liver regeneration after pathological damage as well as for treatment of hepatocarcinomas.