Obesity has reached pandemic proportions and is a risk factor for neurodegenerative diseases, including Alzheimer's disease. Chronic inflammation is common in obese patients, but the mechanism between inflammation and cognitive impairment in obesity remains unclear. Accumulative evidence shows that protein-tyrosine phosphatase 1B (PTP1B), a neuroinflammatory and negative synaptic regulator, is involved in the pathogenesis of neurodegenerative processes. We investigated the causal role of PTP1B in obesity-induced cognitive impairment and the beneficial effect of PTP1B inhibitors in counteracting impairments of cognition, neural morphology, and signaling. We showed that obese individuals had negative relationship between serum PTP1B levels and cognitive function. Furthermore, the PTP1B level in the forebrain increased in patients with neurodegenerative diseases and obese cognitive impairment mice with the expansion of white matter, neuroinflammation and brain atrophy. PTP1B globally or forebrain-specific knockout mice on an obesogenic high-fat diet showed enhanced cognition and improved synaptic ultrastructure and proteins in the forebrain. Specifically, deleting PTP1B in leptin receptor-expressing cells improved leptin synaptic signaling and increased BDNF expression in the forebrain of obese mice. Importantly, we found that various PTP1B allosteric inhibitors (e.g., MSI-1436, well-tolerated in Phase 1 and 1b clinical trials for obesity and type II diabetes) prevented these alterations, including improving cognition, neurite outgrowth, leptin synaptic signaling and BDNF in both obese cognitive impairment mice and a neural cell model of PTP1B overexpression. These findings suggest that increased forebrain PTP1B is associated with cognitive decline in obesity, whereas inhibition of PTP1B could be a promising strategy for preventing neurodegeneration induced by obesity.Copyright © 2024. Published by Elsevier Inc.