Oxothiazolidine carboxylic acid is a prodrug of cysteine that acts as an anti-diabetic agent via insulin secretion and the formation of the Ca2+-mobilizing second messenger, cyclic ADP-ribose (cADPR). Here we show that a hybrid compound, arginine thiazolidine carboxylate (ATC), increases cytoplasmic Ca2+ in pancreatic β-cells, and that the ATC-induced Ca2+ signals result from the sequential formation of two Ca2+-mobilizing second messengers: nicotinic acid adenine dinucleotide phosphate (NAADP) and cADPR. Our data demonstrate that ATC has potent insulin-releasing properties, due to the additive action of its two components; thiazolidine carboxylate (TC) and L-arginine. TC increases glutathione (GSH) levels, resulting in cAMP production, followed by a cascade pathway of NAADP/nitric oxide (NO)/cGMP/cADPR synthesis. L-arginine serves as the substrate for NO synthase (NOS), which results in cADPR synthesis via cGMP formation. Neuronal NOS is specifically activated in pancreatic β-cells upon ATC treatment. These results suggest that ATC is an ideal candidate as an anti-diabetic, capable of modulating the physiological Ca2+ signalling pathway to stimulate insulin secretion.