GPR40 (G-protein-coupled receptor 40) has been shown to be a physiologically relevant receptor for long-chain fatty acids. It is a family A G-protein-coupled receptor highly expressed in the beta-cell where it increases insulin secretion by signalling via Gq and phospholipase C. Fatty acids are well known to mediate both acute stimulatory effects and chronic detrimental effects on the beta-cell. GPR40-transgenic and GPR40-/- animals have been important tools in studies of the metabolic effects of GPR40. In the present article, we review the literature on transgenic GPR40 models and present some of our own studies on the effects of a high-fat diet on the metabolic phenotype of GPR40-/- mice. GPR40 ligands represent interesting novel therapies for Type 2 diabetes but it is presently unclear whether agonists or antagonists represent the best therapeutic approach.