Abstract Local estrogen production by aromatase is an important mechanism of autocrine stimulation in hormone-dependent breast cancer. We have previously shown that 17-β estradiol (E2) rapidly enhances aromatase enzymatic activity through an increase of tyrosine protein phosphorylation controlled by the activity of the c-Src kinase in breast cancer cells. Here, we investigated the protein tyrosine phosphatase PTP1B (protein tyrosine phosphatase 1B) as a potential regulator of aromatase activity. We demonstrated a specific association between PTP1B and aromatase at protein-protein level and a reduction of aromatase activity in basal and E2-treated MCF-7 and ZR75 breast cancer cells when PTP1B was overexpressed. Indeed, a specific tyrosine phosphatase inhibitor increased basal and E2-induced enzymatic activity as well as tyrosine phosphorylation status of the purified aromatase protein. Moreover, E2 through phosphatidylinositol 3 kinase/Akt activation caused a significant decrease of PTP1B catalytic activity along with an increase in its serine phosphorylation. Concomitantly, the phosphatidylinositol 3 kinase inhibitor LY294002 or a dominant negative of Akt was able to reduce the E2 stimulatory effects on activity and tyrosine phosphorylation levels of aromatase. Taken together, our results suggest that E2 can impair PTP1B ability to dephosphorylate aromatase, and thus it increases its enzymatic activity, creating a positive feedback mechanism for estradiol signaling in breast cancer.