Tyrosine protein phosphatase non‐receptor type 1 (PTP1B; also known as protein tyrosine phosphatase 1B) is a member of the protein tyrosine phosphatase (PTP) family and is a soluble enzyme that plays an essential role in different physiological processes, including the regulation of metabolism, specifically in insulin and leptin sensitivity. PTP1B is crucial in the pathogenesis of type 2 diabetes mellitus and obesity. These biological functions have made PTP1B validated as an antidiabetic and anti‐obesity, and potentially anticancer, molecular target. Four main approaches aim to inhibit PTP1B: orthosteric, allosteric, bidentate inhibition, and PTPN1 gene silencing. Developing a potent and selective PTP1B inhibitor is still challenging due to the enzyme's ubiquitous expression, subcellular location, and structural properties. This article reviews the main advances in the study of PTP1B since it was first isolated in 1988, as well as recent contextual information related to the PTP family to which this protein belongs. Furthermore, we offer an overview of the role of PTP1B in diabetes and obesity, and the challenges to developing selective, effective, potent, bioavailable, and cell‐permeable compounds that can inhibit the enzyme.