Since the discovery of leptin in 1994, we now have a better understanding of the cellular and molecular mechanisms underlying its biological effects. In addition to its established anti-obesity effects, leptin exerts antidiabetic actions that are independent of its regulation of body weight and food intake. In particular, leptin can correct diabetes in animal models of type 1 and type 2 diabetes. In addition, long-term leptin replacement therapy improves glycaemic control, insulin sensitivity and plasma triglycerides in patients with severe insulin resistance due to lipodystrophy. These results have spurred enthusiasm for the use of leptin therapy to treat diabetes. Here, we review the current understanding of the glucoregulatory functions of leptin, emphasizing its central mechanisms of action and lessons learned from clinical studies, and discuss possible therapeutic applications of leptin in the treatment of type 1 and type 2 diabetes.