It is reported that PTP1B limits cytokine signaling in vitro. However, PTP1B’s function during inflammation in vivo is not known. In this report, we determined whether PTP1B deficiency affects allergic inflammation in vivo. Briefly, lungs of OVA-challenged PTP1B−/− mice had elevated numbers of eosinophils and eosinophil progenitors at 6 h after one OVA challenge and at 24 h after a third OVA challenge as compared with OVA-challenged wild-type mice. There was also an increase in numbers of CD11b+ SiglecF+ CD34+ IL-5Rα+ eosinophil progenitors in the bone marrow, peripheral blood, and spleens of OVA-challenged PTP1B−/− mice. Intravital microscopy revealed that, in OVA-challenged PTP1B−/− mice, blood leukocytes rapidly bound to endothelium (5–30 min), whereas, in wild-type mice, blood leukocytes bound to endothelium at the expected 6–18 h. Consistent with early recruitment of leukocytes, lung eotaxin and Th2 cytokine levels were elevated early in the PTP1B−/− mice. Interestingly, spleen leukocytes from PTP1B−/− mice exhibited an increased chemotaxis, chemokinesis, and transendothelial migration in vitro. In summary, PTP1B functions as a critical negative regulator to limit allergic responses.