Xelaglifam, developed as a GPR40/FFAR1 agonist, induces glucose-dependent insulin secretion and reduces circulating glucose levels for Type 2 diabetes treatment. This study investigated the effects of Xelaglifam in comparison with Fasiglifam on the in vitro/in vivo anti-diabetic efficacy and selectivity, and the mechanistic basis. In vitro studies on downstream targets of Xelaglifam were performed in GPR40-expressing cells. Xelaglifam treatment exhibited dose-dependent effects, increasing inositol phosphate-1, Ca²⁺ mobilization, and β-arrestin recruitment (EC50: 0.76 nM, 20 nM, 68 nM), supporting its role in Gq protein-dependent and G-protein-independent mechanisms. Despite a lack of change in the cAMP pathway, the Xelaglifam-treated group demonstrated increased insulin secretion compared to Fasiglifam in HIT-T15 β cells under high glucose conditions. High doses of Xelaglifam (<30 mg/kg) did not induce hypoglycemia in Sprague-Dawley rats. In addition, Xelaglifam lowered glucose and increased insulin levels in diabetic rat models (GK, ZDF, OLETF). In GK rats, 1 mg/kg of Xelaglifam improved glucose tolerance (33.4 % and 15.6 % for the 1 and 5 h) after consecutive glucose challenges. Moreover, repeated dosing in ZDF and OLETF rats resulted in superior glucose tolerance (34 % and 35.1 % in ZDF and OLETF), reducing fasting hyperglycemia (18.3 % and 30 % in ZDF and OLETF) at lower doses; Xelaglifam demonstrated a longer-lasting effect with a greater effect on β-cells including 3.8-fold enhanced insulin secretion. Co-treatment of Xelaglifam with SGLT-2 inhibitors showed additive or synergistic effects. Collectively, these results demonstrate the therapeutic efficacy and selectivity of Xelaglifam on GPR40, supportive of its potential for the treatment of Type 2 diabetes.