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Inhibition of protein tyrosine phosphatase 1B (PTP1B) has been proposed as a novel therapy to treat type 2 diabetes and obesity. In order to identify novel PTP1B inhibitors, we have developed a robust screen in Saccharomyces cerevisiae where growth is dependent on PTP1B catalytic activity. This was based on the observation that overexpression of v-Src, a tyrosine kinase, in yeast leads to lethality through mitotic dysfunction and this lethality can be reversed by co-expression of PTP1B. The expression levels of v-Src and PTP1B were optimized to obtain a balance between robust growth and sensitivity to inhibitors. Screening was carried out in 96-well plates and growth of the liquid culture measured by absorbance at 600 nm. Initial characterization was performed using vanadate as well as some novel PTP1B inhibitors. Vanadate specifically inhibited PTP1B-dependent growth in a dose dependent manner with an EC50 of 0.92 ± 0.07 mM. This simple yeast growth interference assay has the potential for use as a high throughput screen for PTP1B inhibitors in sample collections or crude mixtures.