Effects of ARA290 on glucose homeostasis were studied in type 2 diabetic Goto-Kakizaki (GK) rats. In GK rats receiving ARA290 daily for up to 4 wks, plasma glucose concentrations were lower after 3 and 4 wks, and hemoglobin A 1c (Hb A 1c ) was reduced by ~20% without changes in whole body and hepatic insulin sensitivity. Glucose-stimulated insulin secretion was increased in islets from ARA290-treated rats. Additionally, in response to glucose, carbachol and KCl, islet cytoplasmic free Ca 2+ concentrations, [Ca 2+ ] i , were higher and the frequency of [Ca 2+ ] i oscillations enhanced compared with placebo. ARA290 also improved stimulus-secretion coupling for glucose in GK rat islets, as shown by an improved glucose oxidation rate, ATP production and acutely enhanced glucose-stimulated insulin secretion. ARA290 also exerted an effect distal to the ATP-sensitive potassium (K ATP ) channel on the insulin exocytotic pathway, since the insulin response was improved following islet depolarization by KCl when K ATP channels were kept open by diazoxide. Finally, inhibition of protein kinase A completely abolished effects of ARA290 on insulin secretion. In conclusion, ARA290 improved glucose tolerance without affecting hematocrit in diabetic GK rats. This effect appears to be due to improved β-cell glucose metabolism and [Ca 2+ ] i handling, and thereby enhanced glucose-induced insulin release.