OBJECTIVE Exenatide is a 39-amino-acid peptide widely used to manage type 2 diabetes mellitus. However, it has a short plasma half-life and requires a twice daily injection regime. To overcome these drawbacks we used maleimide-polyethylene glycol to induce site-specific PEGylation. METHODS The analogue PB-105 (ExC39) was produced by replacing cysteine at position 39 of exenatide to provide a free thiol group. PB-105 showed the same glucoregulatory activity as exenatide in mice. Site-specific PEGylation of PB-105 was performed to produce PB-110 (ExC39PEG5kDa), PB-106 (ExC39PEG20kDa), PB-107 (ExC39PEG30kDa) and PB-108 (ExC39PEG40kDa). Their effects on intracellular cAMP, acute glucoregulatory activity and pharmacokinetic profile were compared in mice and rats. RESULTS PEGylation shifted the concentration-response curve of PB-105 to the right in a parallel, polyethylene glycol mass-dependent manner but with an inflexion point of at least 20 kDa. The activities of PB-107 and PB-108 but not PB-106 were reduced by 90% and 99%. PEGylation affected in vivo glucoregulatory activity in the same 'Inflexion-Shift' fashion at least at 20 kDa, but linearly increased plasma duration and systemic exposure without inflexion. PB-106 had a plasma t(1/2) approximately 10-fold that of PB-105, and exhibited superior glucoregulatory activity compared with PB-105 in normal and diabetic mice. CONCLUSIONS Site-specific PEGylation of exenatide with a permanent amide linkage affects its activity in a new type of 'Inflexion-Shift' fashion. PB-106 is a putative new analogue for treating diabetes; it possesses no loss of in vitro activity, prolonged plasma duration and superior, improved in vivo glucoregulatory activity compared with exenatide.