OBJECTIVE: We have previously reported that vascular injury or treatment of cultured vascular smooth muscle cells with platelet-derived growth factor-BB (PDGF-BB) or fibroblast growth factor-2 (FGF2) increases the levels of protein tyrosine phosphatase (PTP)1B. The current study was designed to test the hypothesis that PTP1B attenuates PDGF- or FGF-induced motility and proliferation of cultured cells, as well as neointima formation in injured rat carotid arteries. METHODS AND RESULTS: Treatment of cultured cells with adenovirus expressing PTP1B decreased PDGF-BB- or FGF2-induced cell motility and blocked PDGF-BB- or FGF2-induced proliferation, whereas expression of dominant negative PTP1B (C215S-PTP1B) uncovered the motogenic effect of subthreshold levels of PDGF-BB or FGF2, increased neointimal and medial cell proliferation, and induced neointimal enlargement after balloon injury. The inhibitory effect of PTP1B directed against PDGF in cultured cells was associated with dephosphorylation of the PDGFbeta receptor. CONCLUSIONS: PTP1B suppresses cell proliferation and motility in cultured smooth muscle cells treated with PDGF-BB or FGF2, and the phosphatase plays a counter-regulatory role in vascular injury-induced cell proliferation and neointima formation. Taken together with previous studies indicating increased PTP1B levels in cells treated with growth factors, the current findings are the first to report the existence of an inhibitory feedback loop involving PDGF or FGF, and PTP1B in blood vessels.