We have studied the effects of oral administration of vanadate, an insulinometic agent and a potent inhibitor of phosphotyrosyl protein phosphatase (PTPase) in vitro, on blood glucose and PTPase action, in two hyperinsulinemic rodent models of non-insulin-dependent diabetes mellitus (NIDDM). Oral administration of vanadate (0.25 mg/ml in the drinking water) to ob/ob mice for 3 wk lowered blood glucose level from 236 +/- 4 to 143 +/- 2 mg/dl without effect on body weight. Administration of vanadate to db/db mice produced a similar effect. Electron microscopic examination revealed no signs of hepatotoxicity after 47 d of treatment. There was a slight reduction in insulin receptor autophosphorylation when tested by immunoblotting with antiphosphotyrosine antibody after in vivo stimulation, and the phosphorylation of the endogenous substrate of the insulin receptor, pp185, was markedly decreased in the ob/ob mice. Both cytosolic and particulate PTPase activities in liver of ob/ob mice measured by dephosphorylation of a 32P-labeled peptide corresponding to the major site of insulin receptor autophosphorylation were decreased by approximately 50% (P less than 0.01). In db/db diabetic mice, PTPase activity in the cytosolic fraction was decreased to 53% of control values (P less than 0.02) with no significant difference in the particulate PTPase activity. Treatment with vanadate did not alter hepatic PTPase activity as assayed in vitro, or receptor and substrate phosphorylation as assayed in vivo, in ob/ob mice despite its substantial effect on blood glucose. These data indicate that vanadate is an effective oral hypoglycemic treatment in NIDDM states and suggest that its major effects occurs distal to the insulin receptor tyrosine kinase.