DPP-4 (dipeptidyl peptidase-4) degrades the incretin hormones GLP-1 (glucagon-like peptide-1) and GIP (gastric inhibitory polypeptide), decreasing their stimulatory effects on beta-cell insulin secretion. In patients with Type 2 diabetes, meal-related GLP-1 secretion is reduced. DPP-4 inhibitors (alogliptin, saxagliptin, sitagliptin and vildagliptin) correct the GLP-1 deficiency by blocking this degradation, prolonging the incretin effect and enhancing glucose homoeostasis. DPP-4 is a member of a family of ubiquitous atypical serine proteases with many physiological functions beyond incretin degradation, including effects on the endocrine and immune systems. The role of DPP-4 on the immune system relates to its extra-enzymatic activities. The intracytosolic enzymes DPP-8 and DPP-9 are recently discovered DPP-4 family members. Although specific functions of DPP-8 and DPP-9 are unclear, a potential for adverse effects associated with DPP-8 and DPP-9 inhibition by non-selective DPP inhibitors has been posed based on a single adverse preclinical study. However, the preponderance of data suggests that such DPP-8 and DPP-9 enzyme inhibition is probably without clinical consequence. This review examines the structure and function of the DPP-4 family, associated DPP-4 inhibitor selectivity and the implications of DPP-4 inhibition in the treatment of Type 2 diabetes.