Free fatty acids (FFAs) serve not only as nutrients that provide energy but also as extracellular signaling molecules that manipulate intracellular physiological events through FFA receptors (FFARs) such as FFAR4. FFAR4 is also known as G-protein coupled receptor 120 (GPR120). The main role of GPR120 is to elicit FFA regulation on metabolism homeostasis. GPR120 agonism correlates with prevention of the occurrence and development of metabolic disorders such as obesity and diabetes. GPR120 activation directly or indirectly inhibits inflammation, modulates hormone secretion from the gastrointestinal tract and pancreas, and regulates lipid and/or glucose metabolism in adipose, liver, and muscle tissues, which may help prevent obesity and diabetes. This review summarizes recent advances in physiological roles of GPR120 in preventing insulin resistance and protecting pancreatic islet function, and examines how resident GPR120 in the pancreas may be involved in modulating pancreatic islet function.