G protein-coupled receptor 40 (GPR40) is predominantly expressed in pancreatic β-cells and activated by long-chain fatty acids. GPR40 has drawn considerable interest as a potential therapeutic target for type 2 diabetes mellitus (T2DM) due to its important role in enhancing glucose-stimulated insulin secretion (GSIS). Encouragingly, GPR40 is also proven to be highly expressed in glucagon-like peptide-1 (GLP-1)-producing enteroendocrine cells afterwards, which opens a potential role of GPR40 in enhancing GLP-1 secretion to exert additional anti-diabetic efficacy. In the present study, we discovered a novel GPR40 agonist, yhhu4488, which is structurally different from other reported GPR40 agonists. Yhhu4488 showed potent agonist activity with EC50 of 49.96 nM, 70.83 nM and 58.68 nM in HEK293 cells stably expressing human, rat and mouse GPR40, respectively. Yhhu4488 stimulated GLP-1 secretion from fetal rat intestinal cells (FRIC) via triggering endogenous calcium store mobilization and extracellular calcium influx. The effect of yhhu4488 on GLP-1 secretion was further confirmed in type 2 diabetic db/db mice. Yhhu4488 exhibited satisfactory potency in in vivo studies. Single administration of yhhu4488 improved glucose tolerance in SD rats. Chronic administration of yhhu4488 effectively decreased fasting blood glucose level, improved β-cell function and lipid homeostasis in type 2 diabetic ob/ob mice. Taken together, yhhu4488 is a novel GPR40 agonist that enhances GLP-1 secretion, improves metabolic control and β-cell function, suggesting its promising potential for the treatment of type 2 diabetes.