Muscle atrophy occurs under various catabolic conditions, including insulin deficiency, insulin resistance, or increased levels of glucocorticoids. This results from reduced levels of insulin receptor substrate 1 (IRS-1), leading to decreased phosphatidylinositol 3-kinase activity and thereby activation of FoxO transcription factors. However, the precise mechanism of reduced IRS-1 under a catabolic condition is unknown. Here, we report that C1-Ten is a novel protein tyrosine phosphatase (PTPase) of IRS-1 that acts as a mediator to reduce IRS-1 under a catabolic condition, resulting in muscle atrophy. C1-Ten preferentially dephosphorylated Y612 of IRS-1, which accelerated IRS-1 degradation. These findings suggest a novel type of IRS-1 degradation mechanism which is dependent on C1-Ten and extends our understanding of the molecular mechanism of muscle atrophy under catabolic conditions. C1-Ten expression is increased by catabolic glucocorticoid and decreased by anabolic insulin. Reflecting these hormonal regulations, the muscle C1-Ten is upregulated in atrophy but downregulated in hypertrophy. This reveals a previously unidentified role of C1-Ten as a relevant PTPase contributing to skeletal muscle atrophy.