A series of novel thiophene derivatives was designed, synthesized and their activities as competitive inhibitors of protein tyrosine phosphatase (PTPs) 1B (PTP1B) inhibitors were evaluated. All the compounds showed inhibitory potencies, and 10 of these exhibited moderate inhibitory activities with IC(50) values less than 10 microM. The activity of the most potent compound P28 (IC(50)=2.1 microM) was 15 times higher than that of the hit compound P01. Further, four representative compounds (P19, P22, P28, and P31) demonstrated remarkably high selectivities against other PTPs (e.g., PTPalpha, LAR, CD45, and TCPTP); P19 exhibited greater than sixfold selectivity over highly homologous TCPTP. More importantly, these compounds are permeable to cell membranes. The treatment of CHO-K1 cells with P28 (10 microM) resulted in increased phosphorylation of AKT, which suggested extensive cellular activity of this compound. The novel chemical entities reported in this study could be used for overcoming the poor selectivity and low cellular activity of PTP1B inhibitors and might represent a starting point for development of therapeutic PTP inhibitors.