Glucagon is a hormone secreted from the alpha cells of the pancreatic islets. Through its effect on hepatic glucose production (HGP), glucagon plays a central role in the regulation of glucose homeostasis. In patients with type 2 diabetes mellitus (T2DM), abnormal regulation of glucagon secretion has been implicated in the development of fasting and postprandial hyperglycaemia. Therefore, new therapeutic agents based on antagonizing glucagon action, and hence blockade of glucagon-induced HGP, could be effective in lowering both fasting and postprandial hyperglycaemia in patients with T2DM. This review focuses on the mechanism of action, safety and efficacy of glucagon antagonists in the treatment of T2DM and discusses the challenges associated with this new potential antidiabetic treatment modality.