Protein Tyrosine Phosphatase 1B (PTP1B) has been recognized as a promising therapeutic target for treating obesity, diabetes, and certain cancers for over a decade. Previous drug design has focused on inhibitors targeting 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. Therefore, it is important to develop PTP1B inhibitors with alternative inhibitory strategies. Using computational studies including molecular docking, molecular dynamics simulations, and binding free energy calculations, we found that lupane triterpenes selectively inhibited PTP1B by targeting its more hydrophobic and less conserved allosteric site. These findings were verified using two enzymatic assays. Furthermore, the cell culture studies showed that lupeol and betulinic acid inhibited the PTP1B activity stimulated by TNFα in neurons. Our study indicates that lupane triterpenes are selective PTP1B allosteric inhibitors with significant potential for treating those diseases with elevated PTP1B activity.