Dendritic cells (DC) are the major antigen-presenting cells bridging innate and adaptive immunity, a function they perform by converting quiescent DC to active, mature DC with the capacity to activate naïve T cells. They do this by migrating from the tissues to the T cell area of the secondary lymphoid tissues. Here, we demonstrate that myeloid cell-specific genetic deletion of PTP1B (LysM PTP1B) leads to defects in lipopolysaccharide-driven bone marrow-derived DC (BMDC) activation associated with increased levels of phosphorylated Stat3. We show that myeloid cell-specific PTP1B deletion also causes decreased migratory capacity of epidermal DC, as well as reduced CCR7 expression and chemotaxis to CCL19 by BMDC. PTP1B deficiency in BMDC also impairs their migration in vivo. Further, immature LysM PTP1B BMDC display fewer podosomes, increased levels of phosphorylated Src at tyrosine 527, and loss of Src localization to podosome puncta. In co-culture with T cells, LysM PTP1B BMDC establish fewer and shorter contacts than control BMDC. Finally, LysM PTP1B BMDC fail to present antigen to T cells as efficiently as control BMDC. These data provide first evidence for a key regulatory role for PTP1B in mediating a central DC function of initiating adaptive immune responses in response to innate immune cell activation.