Epithelial-mesenchymal transition (EMT) enables dissemination of neoplastic cells and onset of distal metastasis of primary tumors. However, the regulatory mechanisms of EMT by microenvironmental factors such as transforming growth factor-β (TGF-β) remain largely unresolved. Protein tyrosine phosphatase L1 (PTPL1) is a non-receptor protein tyrosine phosphatase that plays a suppressive role in tumorigenesis of diverse tissues. In this study we investigated the role of PTPL1/PTPN13 in metastasis of lung cancer and the signaling pathways regulated by PTPL1 in terms of EMT of non-small cell lung cancer (NSCLC) cells. We showed that the expression of PTPL1 was significantly downregulated in cancerous tissues of 23 patients with NSCLC compared with adjacent normal tissues. PTPL1 expression was positively correlated with overall survival of NSCLC patients. Then we treated A549 cells in vitro with TGF-β1 (10 ng/mL) and assessed EMT. We found that knockdown of PTPL1 enhanced the migration and invasion capabilities of A549 cells, through enhancing TGF-β1-induced EMT. In nude mice bearing A549 cell xenografts, knockdown of PTPL1 significantly promoted homing of cells and formation of tumor loci in the lungs. We further revealed that PTPL1 suppressed TGF-β-induced EMT by counteracting the activation of canonical Smad2/3 and non-canonical p38 MAPK signaling pathways. Using immunoprecipitation assay we demonstrated that PTPL1 could bind to p38 MAPK, suggesting that p38 MAPK might be a direct substrate of PTPL1. In conclusion, these results unravel novel mechanisms underlying the regulation of TGF-β signaling pathway, and have implications for prognostic assessment and targeted therapy of metastatic lung cancer.