Protein tyrosine phosphatase (PTP) 1B is a potential target for the treatment of diabetes and obesity. Phosphotyrosine (pTyr) is the substrate for PTP1B dephosphorylation. Malonic acid moiety was used herein as a mimic of the phosphate group in pTyr, and novel malonic acid derivatives 1-7 were designed, synthesized and evaluated as PTP1B inhibitors. Results from enzymatic assays indicated that compounds 3 and 4 exhibited potent inhibition against human recombinant PTP1B with IC50 values of 7.66 and 1.88 micromol x L(-1), respectively.