Glucagon‐like peptide‐1 (GLP‐1) is an intestinally derived insulinotropic hormone currently under investigation for use as a novel therapeutic agent in the treatment of type 2 diabetes. One of several important effects of GLP‐1 is on nutrient‐induced pancreatic hormone release and is mediated by binding to a specific G‐protein coupled receptor resulting in the activation of adenylate cyclase and an increase in cAMP generation. In the β‐cell, cAMP binds and modulates activities of both protein kinase A and cAMP‐regulated guanine nucleotide exchange factor II, thereby enhancing glucose‐dependent insulin secretion. The stimulatory action of GLP‐1 on insulin secretion involves interaction with a plethora of signal transduction processes including ion channel activity, intracellular Ca²⁺ handling and exocytosis of the insulin‐containing granules. In this review we focus principally on recent advances in our understanding on the cellular mechanisms proposed to underlie GLP‐1's insulinotropic effect and attempt to incorporate this knowledge into a working model for the control of insulin secretion. Lastly, this review discusses the applicability of GLP‐1 as a therapeutic agent for the treatment of type 2 diabetes.