Protein tyrosine phosphatases 1B are considered to be a desirable validated target for therapeutic development of type II diabetes and obesity. A new series of imidazolyl flavonoids as potential protein tyrosine phosphatase inhibitors were synthesized and evaluated. Bioactive results indicated that some synthesized compounds exhibited potent protein phosphatase 1B (PTP1B) inhibitory activities at the micromolar range. Especially, compound 8b showed the best inhibitory activity (IC50=1.0 µM) with 15-fold selectivity for PTP1B over the closely related T-cell protein tyrosine phosphatase (TCPTP). Cell viability assays indicated that 8b is cell permeable with lower cytotoxicity. Molecular modeling and dynamics studies revealed the reason for selectivity of PTP1B over TCPTP. Quantum chemical studies were carried out on these compounds to understand the structural features essential for activity. Compound 8b should be a potential selective PTP1B inhibitor.