Inadequate secretion of insulin is a very early element in the development of type 2 diabetes and its progression is due to declining beta-cell function. This beta-cell defect is partly related to beta-cell loss, but endocrine regulation of islet function could also be involved. A number of recent studies have highlighted the role of the so-called incretin hormones glucagon-like peptide 1 (GLP-1) and gastric inhibitory peptide (GIP) in beta-cell function and development. Up to two- thirds of the insulin normally secreted in connection with meal intake is thought to be due to the insulinotropic actions of these hormones. Although patients with type 2 diabetes have been demonstrated to exhibit an almost total loss of incretin effect, the glucose-lowering actions of exogenous GLP-1 are well preserved. New therapeutic strategies under investigation include the search for novel agents able to utilize the incretin axis in patients with type 2 diabetes. Two strategies have been applied: the first is treatment with GLP-1, either with chronic infusions or with analogues with diminished clearance, and the second is inhibiting dipeptidyl peptidase IV, the enzyme that inactivates both GLP-1 and GIP in vivo. Inhibition of DP- IV has been shown to raise circulating active incretin levels and thus increase the effective concentrations of these peptides reaching target tissues. Apart from their glucose-dependent manner of stimulating insulin secretion, GLP-1, its analogues, and GIP have been demonstrated to stimulate beta-cell growth, differentiation, proliferation, and survival. Similarly, studies in both humans and in animal models have established DP-IV inhibition as a promising therapeutic approach for the treatment of type 2 diabetes, resulting in an enhancement of glucose tolerance, insulin sensitivity, and beta-cell glucose responsiveness.