As one of fibroblast growth factor (FGF) family members, FGF21 has been extensively investigated for its potential as a drug candidate to combat metabolic diseases. In the present study, recombinant human FGF21 (rhFGF21) was modified with polyethylene glycol (PEGylation) in order to increase its in vivo biostabilities and therapeutic potency. At N-terminal residue rhFGF21 was site-selectively PEGylated with mPEG20 kDa-butyraldehyde. The PEGylated rhFGF21 was purified to near homogeneity by Q Sepharose anion-exchange chromatography. The general structural and biochemical features as well as anti-diabetic effects of PEGylated rhFGF21 in a type 2 diabetic rat model were evaluated. By N-terminal sequencing and MALDI-TOF mass spectrometry, we confirmed that PEG molecule was conjugated only to the N-terminus of rhFGF21. The mono-PEGylated rhFGF21 retained the secondary structure, consistent with the native rhFGF21, but its biostabilities, including the resistance to physiological temperature and trypsinization, were significantly enhanced. The in vivo immunogenicity of PEGylated rhFGF21 was significantly decreased, and in vivo half-life time was significantly elongated. Compared to the native form, the PEGylated rhFGF21 had a similar capacity of stimulating glucose uptake in 3T3-L1 cells in vitro, but afforded a significantly long effect on reducing blood glucose and triglyceride levels in the type 2 diabetic animals. These results suggest that the PEGylated rhFGF21 is a better and more effective anti-diabetic drug candidate than the native rhFGF21 currently available. Therefore, the PEGylated rhFGF21 may be potentially applied in clinics to improve the metabolic syndrome for type 2 diabetic patients.