Fibroblast growth factor (FGF)-21 is a unique member of the FGF family, with several molecular characteristics that differ from classical FGFs and exhibiting a pharmacologic profile that includes a variety of metabolic responses in vitro and when tested in vivo in animal models. FGF21 represents a novel and attractive therapeutic agent for type 2 diabetes mellitus, because of its ability to modulate disease phenotype in preclinical settings without inducing any apparent adverse effects. Although FGF21 was discovered relatively recently, the understanding of its biology and therapeutic utility is rapidly evolving. A number of key metabolically linked molecules and pathways have been suggested to be involved in the mechanism of action of FGF21, depending on the specific target tissue/organ. Further research into these mechanisms should lead to important advances in the understanding of FGF21 biology and pave the way for novel therapeutic strategies. The specifics of FGF21 activities both in cell culture and in vivo, its potential as a target for diabetes, and insights into the molecular mechanisms of FGF21 metabolic actions will be discussed in this review.