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Protein Tyrosine phosphatase 1B (PTP1B) has been implicated as a key negative regulator of both insulin and leptin signaling pathways. Using an NMR-based screening approach with 15N- and 13C-labeled PTP1B, we have identified 2,3-dimethylphenyloxalylaminobenzoic acid (1) as a general, reversible, and competitive PTPase inhibitor. Structure-based approach guided by X-ray crystallography facilitated the development of 1 into a novel series of potent and selective PTP1B inhibitors occupying both the catalytic site and a portion of the noncatalytic, second phosphotyrosine binding site. Interestingly, oral biovailability has been observed in rats for some compounds. Furthermore, we demonstrated in vivo plasma glucose lowering effects with compound 12d in ob/ob mice.