Type-2 diabetes is growing at epidemic proportions world-wide. This report describes the effect of a novel, synthetic, small molecule 2-(3,4-dihydro-2H-pyrrolium-1-yl)-3oxoindan-1-olate (DHPO), on metabolic abnormalities in genetic and dietary mouse models of type-2 diabetes. DHPO (20mg/kg/d i.p. for 21 days) attenuated fasting blood glucose, improved glucose disposal and corrected dyslipidemia in genetic (leptin deficient, ob/ob) and dietary (high-fat-fed) mouse models of insulin resistance. In addition, DHPO augmented 2-deoxy-d-glucose (2DG) uptake in gastrocnemius muscles of wild-type mice and in cultured myotubes. The increase in 2DG-uptake was associated with an increase in the phosphorylation of AMPK (thr-172) and its downstream effector acetyl-CoA carboxylase without any changes in the phosphorylation of Akt of insulin receptor. The AMPK inhibitor, compound C attenuated DHPO-induced glucose-uptake whereas the PI3-kinase inhibitor Wortmannin was less effective. In addition, DHPO failed to augment glucose-uptake in the gastrocnemius muscle from AMPK-alpha2-transgenic (kinase-dead) mice. Taken together, these results suggest that DHPO is a novel small molecule that alleviates impaired glucose tolerance and lipid abnormalities associated with type-2 diabetes.