Protein tyrosine phosphatases constitute an important class of drug targets whose potential has been limited by the paucity of drug-like small-molecule inhibitors. We recently described a class of active-site-directed, moderately selective, and potent inhibitors of the low-molecular-weight protein tyrosine phosphatase (LMW-PTP). Here, we report our extensive structure-based design and optimization effort that afforded inhibitors with vastly improved potency and specificity. The leading compound inhibits LMW-PTP potently and selectively (Ki = 1.2 nM, >8000-fold selectivity). Many compounds exhibit favorable drug-like properties, such as low molecular weight, weak cytochrome P450 inhibition, high metabolic stability, moderate to high cell permeability (Papp > 0.2 nm/s), and moderate to good oral bioavailability (% F from 23 to 50% in mice), and therefore can be used as in vivo chemical probes to further dissect the complex biological as well as pathophysiological roles of LMW-PTP and for the development of therapeutics targeting LMW-PTP.