Selective free fatty acid receptor 1 (FFAR1)/GPR40 agonist fasiglifam (TAK-875), an antidiabetic drug under phase 3 development, potentiates insulin secretion in a glucose-dependent manner by activating FFAR1 expressed in pancreatic β cells. Although fasiglifam significantly improved glycemic control in type 2 diabetes patients with a minimum risk of hypoglycemia in a phase 2 study, the precise mechanisms of its potent pharmacological effects are not fully understood. Here we demonstrate that fasiglifam acts as an ago-allosteric modulator with a partial agonistic activity for FFAR1. In both Ca(2+) influx and insulin secretion assays using cell lines and mouse islets, fasiglifam showed positive cooperativity with the FFAR1 ligand γ-linolenic acid (γ-LA). Augmentation of glucose-induced insulin secretion by fasiglifam, γ-LA, or their combination was completely abolished in pancreatic islets of FFAR1-knockout mice. In diabetic rats, the insulinotropic effect of fasiglifam was suppressed by pharmacological reduction of plasma free fatty acid (FFA) levels using a lipolysis inhibitor, suggesting that fasiglifam potentiates insulin release in conjunction with plasma FFAs in vivo. Point mutations of FFAR1 differentially affected Ca(2+) influx activities of fasiglifam and γ-LA, further indicating that these agonists may bind to distinct binding sites. Our results strongly suggest that fasiglifam is an ago-allosteric modulator of FFAR1 that exerts its effects by acting cooperatively with endogenous plasma FFAs in human patients as well as diabetic animals. These findings contribute to our understanding of fasiglifam as an attractive antidiabetic drug with a novel mechanism of action.