Inhibitors of the regulatory protease dipeptidyl peptidase-IV (DPP-IV) are currently under development in preclinical and clinical studies (several pharmaceutical companies, now in Phase III) as potential drugs for the treatment of type 2 diabetes. Their development is based on the observation that DPP-IV rapidly inactivates the incretin hormone glucagon-like peptide-1 (GLP-1), which is released postprandially from the gut and increases insulin secretion. DPP-IV inhibitors stabilise endogenous GLP-1 at physiological concentrations, and induce insulin secretion in a glucose-dependent manner; therefore, they do not demonstrate any hypoglycaemic effects. Furthermore, they are orally bioavailable. In addition to their ability to protect GLP-1 against degradation, DPP-IV inhibitors also stabilise other incretins, including gastric inhibitory peptide and pituitary adenylate cyclase-activating peptide. They also reduce the antagonistic and desensitising effects of the fragments formed by truncation of the incretins. In clinical studies, when used for the treatment of diabetes over a 1-year period, DPP-IV inhibitors show improved efficacy over time. This finding can be explained by a GLP-1-induced increase in the number of beta cells. Potential risks associated with DPP-IV inhibitors include the prolongation of the action of other peptide hormones, neuropeptides and chemokines cleaved by the protease, and their interaction with DPP-IV-related proteases. Based on their mode of action, DPP-IV inhibitors seem to be of particular value in early forms of type 2 diabetes, either alone or in combination with other types of oral agents.