Glucagon-like peptide-1 (GLP-1) receptor (GLP-1R) agonists have emerged as treatment options for type 2 diabetes mellitus (T2DM). GLP-1R signals through G-protein-dependent, and G-protein-independent pathways by engaging the scaffold protein β-arrestin; preferential signalling of ligands through one or the other of these branches is known as 'ligand bias'. Here we report the discovery of the potent and selective GLP-1R G-protein-biased agonist, P5. We identified P5 in a high-throughput autocrine-based screening of large combinatorial peptide libraries, and show that P5 promotes G-protein signalling comparable to GLP-1 and Exendin-4, but exhibited a significantly reduced β-arrestin response. Preclinical studies using different mouse models of T2DM demonstrate that P5 is a weak insulin secretagogue. Nevertheless, chronic treatment of diabetic mice with P5 increased adipogenesis, reduced adipose tissue inflammation as well as hepatic steatosis and was more effective at correcting hyperglycaemia and lowering haemoglobin A1c levels than Exendin-4, suggesting that GLP-1R G-protein-biased agonists may provide a novel therapeutic approach to T2DM.