The inhibitory reversible oxidation of protein tyrosine phosphatases (PTPs) is an important regulatory mechanism in growth factor signaling. Studies on PTP oxidation have focused on pathways that increase or decrease reactive oxygen species levels and thereby affect PTP oxidation. The processes involved in reactivation of oxidized PTPs remain largely unknown. Here the role of the thioredoxin (Trx) system in reactivation of oxidized PTPs was analyzed using a combination of in vitro and cell-based assays. Cells lacking the major Trx reductase TrxR1 (Txnrd1(-/-)) displayed increased oxidation of PTP1B, whereas SHP2 oxidation was unchanged. Furthermore, in vivo-oxidized PTP1B was reduced by exogenously added Trx system components, whereas SHP2 oxidation remained unchanged. Trx1 reduced oxidized PTP1B in vitro but failed to reactivate oxidized SHP2. Interestingly, the alternative TrxR1 substrate TRP14 also reactivated oxidized PTP1B, but not SHP2. Txnrd1-depleted cells displayed increased phosphorylation of PDGF-beta receptor, and an enhanced mitogenic response, after PDGF-BB stimulation. The TrxR inhibitor auranofin also increased PDGF-beta receptor phosphorylation. This effect was not observed in cells specifically lacking PTP1B. Together these results demonstrate that the Trx system, including both Trx1 and TRP14, impacts differentially on the oxidation of individual PTPs, with a preference of PTP1B over SHP2 activation. The studies demonstrate a previously unrecognized pathway for selective redox-regulated control of receptor tyrosine kinase signaling.