Type 2 diabetes (T2DM) is associated with aggregation of the human islet amyloid polypeptide (hIAPP) into cytotoxic amyloid species. Here we tested the effect of a diphenylpyrazole (DPP)-derived small molecule inhibitor, anle145c, on cytotoxicity and on aggregation properties of hIAPP. We demonstrate that incubation of hIAPP with the inhibitor yields ~10 nm-sized non-toxic oligomers, independent of the initial aggregation state of hIAPP. This suggests that anle145c has a special mode of action in which anle145c-stabilized oligomers act as a thermodynamic sink for the preferred aggregation state of hIAPP and anle145c. We also demonstrate that the inhibitor acts in a very efficient manner, with sub-stoichiometric concentrations of anle145c being sufficient to (i) inhibit hIAPP-induced death of INS-1E cells, (ii) prevent hIAPP fibril formation in solution, and (iii) convert preformed hIAPP fibrils into non-toxic oligomers. Together, these results indicate that anle145c is a promising candidate for inhibition of amyloid formation in T2DM.