Disclosed is the use of the sphingosine-1-phosphate receptor modulator 2-amino-2-(hydroxymethyl)-4-(4-octylphenyl)butyl dihydrogen phosphate (FTY720/Fingolimod/Gilenya) and FTY720-P (Fingolimod-phosphate) for prevention and treatment of type-2 diabetes. The compounds, which are FDA approved drugs for treating multiple sclerosis, are demonstrated to normalize fasting glucose levels.