Diabetes mellitus (DM), especially type 2 diabetes mellitus (T2DM), is the most disruptive metabolic disorder globally affecting human health. To effectively manage this medical condition, the quest for a new medication to treat T2DM continues. The emergence of medication resistance to the insulin and leptin receptors leads to significant concerns. The compounds which can tackle this resistance issue may be helpful in the therapeutic management of T2DM. Protein tyrosine phosphatase 1B (PTP1B) is a promising therapeutic target for treating T2DM. Diverse natural bioactive and synthetic molecules have offered great opportunities for developing lead molecules with significant inhibitory action in in vitro and in vivo against PTP1B. Numerous PTP1B inhibitors have recently been found from natural sources or synthesized by organic synthesis and shown effectiveness for treating T2DM. This review comprehensively updates the latest research findings in developing potent natural and synthetic PTP1B inhibitors over the past six years, including structural features of PTP1B, classification of inhibitors, biological effects, and protein-inhibitors interaction modalities. These studies will be highly helpful for the medicinal chemists working in this field to design and develop novel selective PTP1B inhibitors as anti-diabetic agents in the future.