Type 2 diabetes is thought to develop as a result of progressive beta-cell dysfunction in the setting of insulin resistance, leading to increased risks of microvascular and macrovascular complications. Type 2 diabetes is currently treated with diet and exercise, followed by oral drug therapy, and finally exogenous insulin. While this approach is known to improve glycemic control, none of the currently available therapies significantly improve beta-cell function. In addition, this approach does not address defects in hormonal secretion thought to play key roles in the pathophysiology of type 2 diabetes. Type 2 diabetes is characterized by excess glucagon secretion and insufficient secretion of the hormone amylin from the pancreatic beta-cell. In addition, individuals with type 2 diabetes demonstrate insufficient secretion of the incretin hormone glucagon-like peptide-1 (GLP-1). Novel therapies that leverage the so-called "incretin effect" of GLP-1 (including the incretin mimetics and dipeptidyl peptidase-IV (DPP-IV) inhibitors) are being actively developed for the management of type 2 diabetes. Incretin mimetics are either derivatives of GLP-1, modified to resist proteolysis, or are novel peptides that share glucoregulatory functions with GLP-1 and are naturally resistant to proteolysis. DPP-IV inhibitors enhance the concentration of endogenous GLP-1 by limiting proteolysis of native GLP-1. With the approval of exenatide- the first "incretin mimetic"-treatment of type 2 diabetes will no doubt be changed. An understanding of the effects of these compounds will be needed to enhance the clinical approach to diabetes treatment.