Ghrelin, an acylated 28-amino-acid peptide, is an endogenous ligand of the growth hormone secretagogue type 1a (GHS-R1a). Ghrelin is best known for its hypothalamic actions on growth hormone-releasing hormone neurons and neuropeptide Y/agouti-related peptide neurons; however, ghrelin affects multiple organ systems and the complexity of its functions is only now being realized. Although ghrelin is mainly produced in the stomach, it is also produced in low levels by the hypothalamus and by most peripheral tissues. GHS-R1a is expressed predominantly in the anterior pituitary gland, at lower levels in the brain including hypothalamic neurons that regulate feeding behavior and glucose sensing, and at even lower levels in the pancreas. A reciprocal relationship exists between ghrelin and insulin, suggesting that ghrelin regulates glucose homeostasis. Ablation of ghrelin in mice increases glucose-induced insulin secretion, and improves peripheral insulin sensitivity. This review focuses on the newly emerging role of ghrelin in glucose homeostasis and exploration of whether ghrelin is a potential therapeutic target for diabetes.