Scope Loss of functional β‐cell mass is central for the deterioration of glycemic control in diabetes. The incretin hormone glucagon‐like peptide‐1 (GLP‐1) plays a critical role in maintaining glycemic homeostasis via potentiating glucose‐stimulated insulin secretion and promoting β‐cell mass. Agents that can directly promote GLP‐1 secretion, thereby increasing insulin secretion and preserving β‐cell mass, hold great potential for the treatment of T2D. Methods and results GluTag L‐cells, INS832/13 cells, and mouse ileum crypts and islets are cultured for examining the effects of flavone hispidulin on GLP‐1 and insulin secretion. Mouse livers and isolated hepatocytes are used for gluconeogenesis. Streptozotocin‐induced diabetic mice are treated with hispidulin (20 mg kg−1 day−1, oral gavage) for 6 weeks to evaluate its anti‐diabetic potential. Hispidulin stimulates GLP‐1 secretion from the L‐cell line, ileum crypts, and in vivo. This hispidulin action is mediated via activation of cyclic adenosine monophosphate/protein kinase A signaling. Hispidulin significantly improves glycemic control in diabetic mice, concomitant with improved insulin release, and β‐cell survival. Additionally, hispidulin decreases hepatic pyruvate carboxylase expression in diabetic mice and suppresses gluconeogenesis in hepatocytes. Furthermore, hispidulin stimulates insulin secretion from β‐cells. Conclusion These findings suggest that Hispidulin may be a novel dual‐action anti‐diabetic compound via stimulating GLP‐1 secretion and suppressing hepatic glucose production. In this study, it is found for the first time that hispidulin, a naturally occurring flavone is an inhibitor of phosphodiesterase in intestinal L‐cells, which results in intracellular cAMP (cyclic adenosine monophosphate) accumulation and subsequent activation of protein kinase A, leading to increased GLP‐1 secretion. In addition, hispidulin suppresses gluconeogenesis in primary mouse hepatocytes. Oral administration of hispidulin significantly improves glycemic control in diabetic mice, concomitant with improved insulin release and cell survival.