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Genome wide association studies have associated single nucleotide polymorphisms within the gene locus encoding protein tyrosine phosphatase non-receptor type 2 (PTPN2) with the onset of inflammatory bowel disease (IBD) and other inflammatory disorders. Expression of PTPN2 is enhanced in actively inflamed intestinal tissue featuring a marked up-regulation in intestinal epithelial cells. PTPN2 deficient mice suffer from severe intestinal and systemic inflammation and display aberrant innate and adaptive immune responses. In particular, PTPN2 is involved in the regulation of inflammatory signalling cascades, and critical for protecting intestinal epithelial barrier function, regulating innate and adaptive immune responses, and finally for maintaining intestinal homeostasis. On one hand, dysfunction of PTPN2 has drastic effects on innate host defence mechanisms, including increased secretion of pro-inflammatory cytokines, limited autophagosome formation in response to invading pathogens, and disruption of the intestinal epithelial barrier. On the other hand, PTPN2 function is crucial for controlling adaptive immune functions, by regulating T cell proliferation and differentiation as well as maintaining T cell tolerance. In this way, dysfunction of PTPN2 contributes to the manifestation of IBD. The aim of this review is to present an overview of recent findings on the role of PTPN2 in intestinal homeostasis and the impact of dysfunctional PTPN2 on intestinal inflammation.