Incretins are peptide hormones, exemplified by glucose-dependent insulinotropic peptide and glucagon-like peptide 1 that are released from the gut in response to nutrient ingestion and enhance glucose-stimulated insulin secretion. Incretin action is terminated due to N-terminal cleavage of the peptides by the aminopeptidase dipeptidyl peptidase IV (DPP-IV). Hence, inhibition of glucose-dependent insulinotropic peptide and glucagon-like peptide 1 degradation via reduction of DPP-IV activity represents an innovative strategy for enhancing incretin action in vivo. This review summarises the biology of incretin action, the structure, expression and pleiotropic biological activities of DPP-IV and provides an overview of the rationale, potential merits and theoretical pitfalls in the development of DPP-IV inhibitors for the treatment of type 2 diabetes.