Cardiovascular disease (CVD) is the most prevalent cause of mortality among patients with type 1 or type 2 diabetes, due to accelerated atherosclerosis. Recent evidence suggests a strong link between atherosclerosis and insulin resistance, due to impaired insulin receptor (IR) signalling. Here, we demonstrate that inhibiting the activity of protein tyrosine phosphatase 1B (PTP1B), the major negative regulator of the IR prevents and reverses atherosclerotic plaque formation in an LDLR−/− mouse model of atherosclerosis. Acute (single dose) or chronic PTP1B inhibitor (trodusquemine) treatment of LDLR−/− mice decreased weight gain and adiposity, improved glucose homeostasis and attenuated atherosclerotic plaque formation. This was accompanied by a reduction in both, circulating total cholesterol and triglycerides, a decrease in aortic monocyte chemoattractant protein-1 (MCP-1) expression levels and hyperphosphorylation of aortic Akt/PKB and AMPKα. Our findings are the first to demonstrate that PTP1B inhibitors could be used in prevention and reversal of atherosclerosis development and reduction in CVD risk.