The control of glucose metabolism is a complex process, and dysregulation at any level can cause impaired glucose tolerance and insulin resistance. These two defects are well-known characteristics associated with obesity and onset of type 2 diabetes. Here we introduce the N-terminal dipeptidase, DPP2, as a novel regulator of the glucose metabolism. We generated mice with a neurogenin 3 (NGN3)-specific DPP2 knockdown (kd) to explore a possible role of DPP2 in maintaining metabolic homeostasis. These mice spontaneously developed hyperinsulinemia, glucose intolerance, and insulin resistance by 4 months of age. In addition, we observed an increase in food intake in DPP2 kd mice, which was associated with a significant increase in adipose tissue mass and enhanced liver steatosis but no difference in body weight. In accordance with these findings, the mutant mice had a higher rate of respiratory exchange than the control littermates. This phenotype was exacerbated with age and when challenged with a high-fat diet. We report, for the first time, that DPP2 enzyme activity is essential for preventing hyperinsulinemia and maintaining glucose homeostasis. Interestingly, the phenotype of NGN3-DPP2 kd mice is opposite that of DPP4 knockout mice with regard to glucose metabolism, namely the former have normal glucagon-like peptide 1 levels but present with glucose intolerance, whereas the latter have increased glucagon-like peptide 1, which is accompanied by augmented glucose tolerance.