Acute hepatic failure secondary to paracetamol poisoning is associated with high mortality. Paracetamol-induced hepatotoxicity causes oxidative stress that triggers signalling pathways and ultimately leads to lethal hepatocyte injury. We will review the signalling pathways activated by paracetamol in the liver emphasizing the role of protein tyrosine phosphatase 1B (PTP1B) in the balance between cell death and survival in hepatocytes. PTP1B has emerged as a key modulator of the antioxidant system mediated by the nuclear factor erythroid-2-related factor 2 (Nrf2) in hepatic cells in response to paracetamol overdose. Also, this phosphatase modulates the classical survival pathways triggered by the activation of the insulin-like growth factor-I (IGF-I) signalling cascade. Therefore, PTP1B is a novel therapeutic target against paracetamol-induced liver failure.