Obesity is typically associated with resistance to leptin, yet the mechanism by which leptin signaling becomes impaired is poorly understood. Here we sought to determine if the development of obesity and leptin resistance correlates with increased expression of protein tyrosine phosphatase 1B (PTP1B) in peripheral tissues and whether over-expression of this phosphatase, specifically in liver, could alter the leptin-mediated effects on feeding and glucose metabolism. Obesity was induced in mice through a high-fat diet that resulted in hyperglycemia, hyperinsulinemia and hyperleptinemia. Resistance to leptin was confirmed as exogenous leptin administration reduced food intake in animals on low-fat, but not high-fat diets. Diet-induced resistance to leptin and insulin was associated with increased hepatic levels of PTP1B. Intriguingly, hepatic adenoviral over-expression of PTP1B in ob/ob mice attenuated the ability of exogenous leptin to reduce both plasma glucose levels and food intake. These findings suggest that leptin reduces both plasma glucose and food intake in part through actions on the liver, and hepatic leptin resistance resulting from over-expression of PTP1B may contribute to the development of both diabetes and obesity.