Dipeptidyl peptidase-4 (DPP4) is a widely expressed enzyme transducing actions through an anchored transmembrane molecule and a soluble circulating protein. Both membrane-associated and soluble DPP4 exert catalytic activity, cleaving proteins containing a position 2 alanine or proline. DPP4-mediated enzymatic cleavage alternatively inactivates peptides or generates new bioactive moieties that may exert competing or novel activities. The widespread use of selective DPP4 inhibitors for the treatment of type 2 diabetes has heightened interest in the molecular mechanisms through which DPP4 inhibitors exert their pleiotropic actions. Here we review the biology of DPP4 with a focus on: 1) identification of pharmacological vs physiological DPP4 substrates; and 2) elucidation of mechanisms of actions of DPP4 in studies employing genetic elimination or chemical reduction of DPP4 activity. We review data identifying the roles of key DPP4 substrates in transducing the glucoregulatory, anti-inflammatory, and cardiometabolic actions of DPP4 inhibitors in both preclinical and clinical studies. Finally, we highlight experimental pitfalls and technical challenges encountered in studies designed to understand the mechanisms of action and downstream targets activated by inhibition of DPP4.