Protein tyrosine phosphatase 1B enzyme has been found to be a negative regulator of insulin and leptin signaling pathway. It has gained considerable attention to medicinal chemists as a new therapeutic target for intervention in the treatment of type2 diabetes. A series of N-substituted-5-(thiophen-2-ylmethylene)thiazolidine-2,4-dione derivatives were synthesized and screened in vitro for protein tyrosine phosphatase 1B inhibitory activity and in vivo for anti-hyperglycaemic activity. The introduction of alkyl/halo alkyl moiety onto the amidic nitrogen of thiazolidine-2,4-dione ring was intended to enhance the inhibitor-enzyme affinity and hence, good protein tyrosine phosphatase 1B inhibition. The nature of interactions which governs the binding mode of ligands inside the active site of protein tyrosine phosphatase 1B was further studied by molecular docking simulation. Compound 7 was found to be a potent protein tyrosine phosphatase 1B inhibitor with IC50 9.96 A mu M. The synthesized compounds have also shown significant lowering of blood glucose level.