In pancreatic beta-cells, increased expression of the MODY5 gene product, HNF1 beta, leads to enhanced rates of apoptosis and altered regulation of the cell cycle, suggesting that control of HNF1 beta expression may be important for the control of beta-cell proliferation and viability. It is unclear how these effects of HNF1 beta are mediated, but previously we have identified a protein tyrosine phosphatase, (PTP)-BL, as an HNF1 beta-regulated protein in beta-cells and have now studied the role of this protein in INS-1 beta-cells. Stably transfected cells were generated, which express either wild-type (WT) or a phosphatase-deficient mutant (PTP-BL-CS) of PTP-BL conditionally under the control of a tetracycline-regulated promoter. Enhanced expression of WT PTP-BL inhibited INS-1 cell growth dose dependently, but this effect was not observed when PTP-BL-CS was expressed. Neither construct altered the rate of apoptosis. PTP-BL has been reported to interact with components of the Wnt signalling pathway, and we observed that addition of exogenous Wnt3a resulted in an increase in cell proliferation and a rise in beta-catenin levels, consistent with the operation of this pathway in INS-1 cells. Up-regulation of WT PTP-BL antagonised these responses but PTP-BL-CS failed to inhibit Wnt3a-induced proliferation. The rise in beta-catenin caused by Wnt3a was also suppressed by over-expression of HNF1 beta, suggesting that HNF1 beta may interact with the Wnt signalling pathway via an increase in PTP-BL levels. We conclude that PTP-BL plays an important role in the regulation of cell cycle progression in pancreatic beta-cells, and that it interacts functionally with components of the Wnt signalling pathway.