Tyrosine phosphorylation, controlled by the coordinated action of protein-tyrosine kinases (PTKs) and protein-tyrosine phosphatases (PTPs), is a fundamental regulatory mechanism of numerous physiological processes. PTPs are implicated in a number of human diseases, and their potential as prospective drug targets is increasingly being recognized. Despite their biological importance, until now no comprehensive overview has been reported describing how all members of the human PTP family are related. Here we review the entire human PTP family and present a systematic knowledge-based characterization of global and local similarity relationships, which are relevant for the development of small molecule inhibitors. We use parallel homology modeling to expand the current PTP structure space and analyze the human PTPs based on local three-dimensional catalytic sites and domain sequences. Furthermore, we demonstrate the importance of binding site similarities in understanding cross-reactivity and inhibitor selectivity in the design of small molecule inhibitors.