Type 2 diabetes mellitus is a major and growing health problem throughout the world. Current treatment approaches include diet, exercise, and a variety of pharmacological agents including insulin, biguanides, sulfonylureas and thiazolidinediones. New therapies are still needed to control metabolic abnormalities, and also to preserve beta-cell mass and to prevent loss of beta-cell function. Glucagon-like peptide 1 (GLP-1) is a drug candidate which potentially fulfils these conditions. GLP-1 is an incretin hormone secreted by intestinal L-cells in response to meal ingestion is a novel pharmacological target with multiple antihyperglycemic actions. GLP-1 glucoregulatory actions include glucose-dependent enhancement of insulin secretion, inhibition of glucagon secretion, slowing of gastric emptying and reduction of food intake. GLP-1 is rapidly inactivated by amino peptidase, dipeptidyl peptidase IV (DPP-IV) and the utility of DPP-IV inhibitors are also under investigation. There is a recent upsurge in the development of GLP-1 mimetics and DPP-IV inhibitors as potential therapy for type 2 diabetes. However, both the strategies are having their own advantages and limitations. The present review summarizes the concepts of GLP-1 based therapy for type 2 diabetes and the current preclinical and clinical development in GLP-1 mimetics and DPP-IV inhibitors. Further, the potential advantages and the limitations of both the strategies are discussed.