Protein phosphatases have both protective and promoting roles in the etiology of diseases. A prominent example is the existence of oncogenic as well as tumor-suppressing protein phosphatases. A few protein phosphatase activity modulators are already applied in therapies. These were however not developed in target-directed approaches, and the recent discovery of phosphatase involvement followed their application in therapy. Nevertheless, these examples demonstrate that small molecules can be generated that modulate the activity of protein phosphatases and are beneficial for the treatment of protein phosphorylation diseases. We describe here strategies for the development of activators and inhibitors of protein phosphatases and clarify some long-standing misconceptions concerning the druggability of these enzymes. Recent developments suggest that it is feasible to design potent and selective protein phosphatase modulators with a therapeutic potential.