The protein tyrosine phosphatase (PTPase) Src-homology 2-domain-containing phosphatase (SHP)-1 was recently reported to be a novel regulator of insulin's metabolic action. In order to examine the role of this PTPase in skeletal muscle, we used adenovirus (AdV)-mediated gene transfer to express an interfering mutant of SHP-1 [dominant negative (DN)SHP-1; mutation C453S] in L6 myocytes. Expression of DNSHP-1 increased insulin-induced Akt serine-threonine kinase phosphorylation and augmented glucose uptake and glycogen synthesis. Pharmacological inhibition of glucose transporter type 4 (GLUT4) activity using indinavir and GLUT4 translocation assays revealed an important role for this transporter in the increased insulin-induced glucose uptake in DNSHP-1-expressing myocytes. Both GLUT4 mRNA and protein expression were also found to be increased by DNSHP-1 expression. Furthermore, AdV-mediated delivery of DNSHP-1 in skeletal muscle of transgenic mice overexpressing Coxsackie and AdV receptor also enhanced GLUT4 protein expression. Together, these findings confirm that SHP-1 regulates muscle insulin action in a cell-autonomous manner and further suggest that the PTPase negatively modulates insulin action through down-regulation of both insulin signaling to Akt and GLUT4 translocation, as well as GLUT4 expression.