High protein feeding improves glucose homeostasis in rodents and humans with diabetes, but the mechanisms that underlie this improvement remain elusive. Here we show that acute administration of casein hydrolysate directly into the upper small intestine increases glucose tolerance and inhibits glucose production in rats, independently of changes in plasma amino acids, insulin levels, and food intake. Inhibition of upper small intestinal peptide transporter 1 (PepT1), the primary oligopeptide transporter in the small intestine, reverses the preabsorptive ability of upper small intestinal casein infusion to increase glucose tolerance and suppress glucose production. The glucoregulatory role of PepT1 in the upper small intestine of healthy rats is further demonstrated by glucose homeostasis disruption following high protein feeding when PepT1 is inhibited. PepT1-mediated protein-sensing mechanisms also improve glucose homeostasis in models of early-onset insulin resistance and obesity. We demonstrate that preabsorptive upper small intestinal protein-sensing mechanisms mediated by PepT1 have beneficial effects on whole-body glucose homeostasis.