The high prevalence of obesity and diabetes will lead to higher rates of morbidity and mortality. It is well known that ghrelin plays a potential role in obesity and diabetes. Obestatin, a novel 23 amino acid amidated peptide encoded by the same gene that encodes ghrelin, was initially reported to have opposite actions to ghrelin in the regulation of food intake, emptying of the stomach and body weight. Recent work suggests that obestatin also regulate beta-cell survival and insulin secretion. The ghrelin-obestatin system is, therefore, a promising target for the developing of new drugs for the treatment of obesity and diabetes. This review summarizes the interrelationship between obestatin, obesity and diabetes.