P32/98, also known as isoleucyl thiazolidide, is a potent and selective cell permeable inhibitor of dipeptidyl peptidase IV (DPP IV) with a Ki of 130 nM. P32/98 inhibition of DPP IV prevents degradation of both gastric inhibitory peptide (GIP) and Glucagon-like peptide-1, enhancing insulin secretion. P32/98 improves glucose tolerance, insulin sensitivity and beta-cell glucose responsiveness in diabetic fatty rats following oral administration.