Dipeptidyl peptidase IV (DPP4) is a promising target for the treatment of chronic metabolic type 2 diabetes mellitus (T2D). DPP4 is a highly specific serine protease involved in the regulation and cleavage of two incretin hormones, glucagon-like peptide (GLP-1) and glucose-dependent insulinotropic polypeptide (GIP). These incretin hormones are released by the gastrointestinal tract in response to ingestion of food and stimulate insulin secretion and thereby regulate glucose homeostasis with a low risk of hypoglycemia and glucagon secretion. Currently different chemical classes of DPP4 inhibitors are in last-stage of clinical trials and few of them such as sitagliptin, vildagliptin, saxagliptin alogliptin and linagliptin have already been successfully released into market. These drugs have been approved as either monotherapy or combination therapy with other oral hypoglycemic agents such as metformin, pioglitazone, sulfonylurea, glyburide and glibenclamide for the treatment of T2D. Though several clinical trial compounds were discontinued because of severe adverse toxic effects that are associated with other prolyldipeptidases include DPP8 and DPP9. The current review provides an overview of DPP4 and its inhibitors with emphasis on the structure, expression, activity, selectivity and pharmacokinetics information. This review further dwells upon the issues relating to the rational design and development of selective DPP4 inhibitors for the treatment of T2D.