Background: Cell signaling is dependent on the balance between phosphorylation of proteins by kinases and dephosphorylation by phosphatases. This balance if often disrupted in colorectal cancer (CRC), leading to increased cell proliferation and invasion. For many years research has focused on the role of kinases as potential oncogenes in cancer, while phosphatases were commonly assumed to be tumor suppressive. However, this dogma is currently changing as phosphatases have also been shown to stimulate cancer growth. One of these phosphatases is protein tyrosine phosphatase 1B (PTP1B). The aim of this study was to investigate the expression and phosphatase activity of PTP1B in CRC, and elucidate its effects on cellular functions and signaling. Methods: PTP1B expression was analysed by immunohistochemistry on microsections from biopsies of dysplastic polyps (n=6), adenocarcinoma (n=9) and control (inactive ulcerative colitis, n=5), as well as by western blotting of paired freshly frozen CRC and normal adjacent tissue (n=11). Phosphatase activity was also assessed in these latter samples by immunoprecipitating PTP1B under saturating conditions, followed by a phosphatase activity assay using PNPP as substrate. To investigate the effects of PTP1B on proliferation, adhesion, migration, and elucidate its downstream targets, we manipulated the PTP1B expression in vitro by lentiviral transduction of HCT116 and Caco2 cells with 2 different shRNAs against PTP1B. Results: PTP1B expression in intestinal epithelial cells (IECs) is low in normal colon (14% positive; mean intensity 0.2±0.1) and increases from dysplasia to carcinoma (100% positive IECs; with mean intensity rising from 1.4±0.3 to 1.8±0.3 respectively). These results were confirmed by western blot analysis. The intrinsic enzymatic activity of the PTP1B protein is significantly increased in cancer compared to adjacent normal tissue (mean OD 1.0 in CRC compared to 0.2 in normal tissue) (p=0.001). Knocking down PTP1B in CRC cells reduced the phosphorylation of the mitogenic kinase ERK by approximately 50%, and decreased mRNA levels of downstream targets involved in proliferation; i.e. c-MYC and CyclinD1. Furthermore, adhesion, migration, and proliferation were significantly reduced in PTP1B knockdown cells. Conclusion: Not only is the expression of PTP1B is increased in colorectal cancer as compared to normal tissue, but strikingly, the intrinsic enzymatic activity of the protein is also enhanced, suggesting a role for PTP1B phosphatase activity in CRC progression. Knocking down PTP1B in CRC cell lines results in a less invasive phenotype with lower adhesion, migration and proliferation capabilities, by interfering in the RAS-RAF-ERK pathway. Together these results suggest that inhibition of PTP1B activity is a promising new target in the treatment of colorectal cancer and the prevention of metastasis.