Bile acids are recognized as metabolic modulators. The present study was aimed at evaluating the effects of a potent Asbt inhibitor (264W94), which blocks intestinal absorption of bile acids, on glucose homeostasis in Zucker Diabetic Fatty (ZDF) rats. Oral administration of 264W94 for two wk increased fecal bile acid concentrations and elevated non-fasting plasma total Glp-1. Treatment of 264W94 significantly decreased HbA1c and glucose, and prevented the drop of insulin levels typical of ZDF rats in a dose-dependent manner. An oral glucose tolerance test revealed up to two-fold increase in plasma total Glp-1 and three-fold increase in insulin in 264W94 treated ZDF rats at doses sufficient to achieve glycemic control. Tissue mRNA analysis indicated a decrease in farnesoid X receptor (Fxr) activation in small intestines and the liver but co-administration of a Fxr agonist (GW4064) did not attenuate 264W94 induced glucose lowering effects. In summary, our results demonstrate that inhibition of Asbt increases bile acids in the distal intestine, promotes Glp-1 release and may offer a new therapeutic strategy for type 2 diabetes mellitus.