Protein Tyrosine Phosphatase 1B (PTP1B) has been known to be a therapeutic target for treating obesity, diabetes and certain cancers for over a decade. Previous research has focused on inhibitors which commonly target the active site of PTP1B. However, this has not been successful because the active site is positively charged and conserved among the protein tyrosine phosphatases. This study uses molecular docking and enzymatic assays to reveal that lupane triterpenes selectively inhibit PTP1B by targeting its more hydrophobic and less conserved allosteric site. Molecular dynamic simulations and absolute free binding energy calculations are applied to elucidate the specific interactions between lupane triterpenes and PTP1B allosteric site. Cell culture studies show that selected lupane triterpenes inhibit the elevated TNFα-induced PTP1B activity in neurons and improve leptin sensitivity. These in silico and in vitro studies show for the first time that lupane triterpenes are promising selective PTP1B allosteric inhibitors with significant potential for treating diseases with elevated PTP1B activity.