Zinc is an effector of insulin/IGF-1 signaling and has insulinomimetic effects, the molecular basis of which is not understood. The present study establishes the capacity of zinc to inhibit protein tyrosine phosphatases (PTPs) as a cause for these effects and, moreover, demonstrates modulation of the insulin response by changes in intracellular zinc. The inhibition of PTPs by zinc occurs at significantly lower concentrations than previously reported. In vitro, zinc inhibits PTPs 1B and SHP-1 with IC(50) values of 17 and 93 nM, respectively. A fluorescent probe with a similar binding constant [FluoZin-3, K(D)(Zn) = 15 nM] detects corresponding concentrations of zinc within cells. Increase of cellular zinc after incubation with both zinc and the ionophore pyrithione augments protein tyrosine phosphorylation, and in particular the phosphorylation of three activating tyrosine residues of the insulin/IGF-1 receptor. Vice versa, specific chelation of cellular zinc with the membrane-permeable N,N,N',N'-tetrakis(2-pyridylmethyl)ethylenediamine suppresses insulin- and IGF-1-stimulated phosphorylation. In the context of the emerging concept that intracellular zinc is tightly regulated and fluctuates dynamically, these results suggest that a pool of cellular zinc modulates phosphorylation signaling.