Abstract PTP1B, a validated therapeutic target for diabetes and obesity, has a critical positive role in HER2 signaling in breast tumorigenesis. Efforts to develop therapeutic inhibitors of PTP1B have been frustrated by the chemical properties of the active site. We define a new mechanism of allosteric inhibition that targets the C-terminal, non-catalytic segment of PTP1B. We present what is to our knowledge the first ensemble structure of PTP1B containing this intrinsically disordered segment, within which we identified a binding site for the small-molecule inhibitor MSI-1436. We demonstrate binding to a second site close to the catalytic domain, with cooperative effects between the two sites locking PTP1B in an inactive state. MSI-1436 antagonized HER2 signaling, inhibited tumorigenesis in xenografts and abrogated metastasis in the NDL2 mouse model of breast cancer, validating inhibition of PTP1B as a therapeutic strategy in breast cancer. Currently, we are testing MSI-1436 in a Phase 1 clinical trial in HER2-positive breast cancer patients, in collaboration with the Monter Cancer Center at Northwell Health formerly NS-LIJ. Note: This abstract was not presented at the meeting. Citation Format: Nava Krishnan. PTP1B directed therapeutics for HER2 positive breast cancer [abstract]. In: Proceedings of the American Association for Cancer Research Annual Meeting 2017; 2017 Apr 1-5; Washington, DC. Philadelphia (PA): AACR; Cancer Res 2017;77(13 Suppl):Abstract nr LB-022. doi:10.1158/1538-7445.AM2017-LB-022