Protein-tyrosine phosphatase 1B (PTP1B) is a major regulator of insulin sensitivity. We have described a novel action of PTP1B in the induction of sterol regulatory element-binding protein-1 (SREBP-1) gene expression through activation of protein phosphatase 2A (PP2A). PTP1B is anchored to the endoplasmic reticulum membrane via its C-terminal tail. We have previously reported that membrane localization of PTP1B is essential for PP2A activation, which is crucial for enhancing SREBP-1 gene expression in in vitro experiments. In this study, we further investigated the physiological importance of membrane localization of PTP1B in vivo. We found that transient liver-specific overexpression of wild-type PTP1B (PTP1B-WT) using adenovirus-mediated gene transfer was associated with hypertriglyceridaemia and enhanced hepatic SREBP-1 gene expression in mice. However, overexpression of the C-terminal truncated PTP1B (PTP1BDeltaCT) failed to increase hepatic SREBP-1 expression or serum triglyceride levels, despite causing insulin resistance. Our results indicate that activation of PTP1B in the liver could induce hypertriglyceridaemia and that anchoring of PTP1B to the membrane is crucial for its action.