Several protein tyrosine phosphatases (PTPs) expressed in insulin sensitive-tissues are proposed to attenuate insulin action and could act as key regulators of the insulin receptor (IR) signaling pathway. Among these PTPs, RPTPsigma is expressed in relatively high levels in insulin-target tissues. We show that RPTPsigma-/- knockout mice have reduced plasma glucose and insulin concentrations in the fasted state compared with their wild-type siblings. The knockout animals were also more sensitive to exogenous insulin as assayed by insulin-tolerance tests. Despite increased whole-body insulin sensitivity, tyrosine phosphorylation of the IR was not increased in muscle of RPTPsigma-/- animals, as would be expected in insulin-sensitive animals. Instead, the levels of IR tyrosine phosphorylation and PI3-kinase activity were reduced in the muscle of knockout animals stimulated with insulin in vivo. However, insulin-stimulated Akt serine phosphorylation was essentially identical between both groups of mice. Accordingly, muscles isolated from RPTPsigma-/- mice did not have a significant increase in glucose uptake in response to insulin, suggesting that RPTPsigma did not play a direct role in this process. Taken together, our results suggest an indirect modulation of the IR signaling pathways by RPTPsigma. Since low dose injection of growth hormone (GH) normalized the response to exogenous insulin in RPTPsigma-/- mice, we propose that the insulin hypersensitivity observed in RPTPsigma-/- mice is secondary to their neuroendocrine dysplasia and GH/IGF-1 deficiency.