Protein phosphorylation on tyrosine residues is tightly controlled by protein tyrosine phosphatases (PTPs) at multiple levels: spatio-temporal expression, subcellular localization and post-translational modification. Structural and functional analysis of the PTP domains has provided insight into catalysis and regulatory mechanisms that control the enzymatic activity. Understanding the molecular basis of PTP regulation is of fundamental importance to dissect the pleiotropic effect of these enzymes in both health and disease. Here, we review recent insights into the regulation of receptor-like PTPs by extracellular ligands and into regulation by reversible oxidation that impairs catalysis directly. The physiological roles of PTPs are essential in homeostasis in eukaryotic cells and pertubation of their functional attributes causes different disease states. As an example, we discuss recent findings indicating how inappropriate oxidation of PTPs in cancer cells may contribute to cell transformation. On the other hand, PTPs from many pathogens are key virulence factors and manipulate signalling pathways in the host cells to promote invasion and survival of the microorganisms. This research area has received relatively little attention but has advanced remarkably. We review the structural features of pathogenic PTPs, their similarities and differences with eukaryotic PTPs, and the possible exploitation of this knowledge for therapeutic intervention.