As a member of the class II cysteine-based protein tyrosine phosphatases, low molecular weight protein tyrosine phosphatase (LMWPTP) plays a pivotal role in animal physiology, particularly in signaling transduction, but its specific function in lipid metabolism remains poorly understood. Herein, the structure and metabolic functions of LMWPTP were investigated using the Caenorhabditis elegans (C. elegans) as a convenient model. The nematode LMWPTP was found to be highly conserved in sequence, functional domains, and tertiary structure compared to its mammalian homologs. Through RNA interference (RNAi) targeting lmwptp, we observed a modest increase in lipid accumulation in nematodes, evidenced by higher triglyceride levels, enlarged lipid droplets, and an increase in total fatty acid content, despite no changes in body size. Mechanistically, lmwptp RNAi promoted adipogenesis by modulating the insulin-like growth factor 1 signaling pathway, facilitating the nuclear translocation of DAF-16, which in turn upregulated fat-7 expression. Furthermore, increased ROS levels were associated with enhanced lipogenesis. The knockdown of lmwptp also attenuated lipolysis and lipophagy via modulation of the AMPK pathway. Despite these alterations, key physiological functions related to energy metabolism were preserved, and lifespan was extended with delayed aging markers. These findings highlight LMWPTP's significant role in lipid regulation, offering new insights and potential therapeutic targets for human lipid metabolism disorders.