Insulin resistance and progressive decline in functional β-cell mass are two key factors for developing T2D, which is largely driven by overweight and obesity, a significant obstacle for effective metabolic control in many patients with T2D. Thus, agents that simultaneously ameliorate obesity and promote insulin sensitivity and β-cell function could be more effective for treating T2D. Here, we report that elenolic acid (EA), a small molecule, is such a dual-action agent. Oral administration of EA restored glucose homeostasis and other metabolic disorders in diet-induced obese mice, which were associated with increased circulating GLP-1, PYY, and GIP concentrations. EA slowed gastric emptying, downregulated hypothalamic agouti-related peptide, and reduced food intake and obesity in obese mice. EA also exerted potent anti-hyperglycemic effect in db/db mice that was comparable to that of liraglutide but greater than that of metformin, and it was more effective in promoting weight loss relative to these two drugs. Mechanistically, EA directly stimulated GLP-1 and PYY secretion from L-cells, and its induction of GLP-1 release is mediated via Gαq/phospholipase C-mediated pathway. EA also directly suppresses glucose production in liver cells. These results suggest that EA is a novel, dual-action agent for developing drug to treat both T2D and obesity.