Concurrent with the spread of the western lifestyle, the prevalence of all types of diabetes is on the rise in the worlds population. The number of diabetics is increasing by 4-5 percent per year with an estimated 40-45 percent of individuals over the age of 65 years having either type II diabetes or impaired glucose tolerance. Since the signs of diabetes are not immediately obvious, diagnosis can be preceded by an extended period of impaired glucose tolerance resulting in the prevalence of beta-cell dysfunction and macrovascular complications. In addition to increased medical vigilance, diabetes is being combated through aggressive treatment directed at lowering circulating blood glucose and inhibiting postprandial hyperglycemic spikes. Current strategies to treat diabetes include reducing insulin resistance using glitazones, supplementing insulin supplies with exogenous insulin, increasing endogenous insulin production with sulfonylureas and meglitinides, reducing hepatic glucose production through biguanides, and limiting postprandial glucose absorption with alpha-glucosidase inhibitors. In all of these areas, new generations of small molecules are being investigated which exhibit improved efficacy and safety profiles. Promising biological targets are also emerging such as (1) insulin sensitizers including protein tyrosine phosphatase-1B (PTP-1B) and glycogen synthase kinase 3 (GSK3), (2) inhibitors of gluconeogenesis like pyruvate dehydrogenase kinase (PDH) inhibitors, (3) lipolysis inhibitors, (4) fat oxidation including carnitine palmitoyltransferase (CPT) I and II inhibitors, and (5) energy expenditure by means of beta 3-adrenoceptor agonists. Also important are alternative routes of glucose disposal such as Na + -glucose cotransporter (SGLT) inhibitors, combination therapies, and the treatment of diabetic complications (eg. retinopathy, nephropathy, and neuropathy). With may new opportunities for drug discovery, the prospects are excellent for development of innovative therapies to effectively manage diabetes and prevent its long term complications. This review highlights recent (1997-2000) advances in diabetes therapy and research with an emphasis on small molecule drug design (275 references).