Type 2 diabetes (T2D) is characterized by elevated blood glucose levels owing to insufficient secretion and/or activity of the glucose-lowering hormone insulin. Glucagon-like peptide-1 (GLP-1) has received much attention as a new treatment for diabetes because of its multiple blood glucose-lowering effects, including glucose-dependent enhancement of insulin secretion, inhibition of gastric emptying, and promotion of the survival and growth of insulin-producing beta-cells. GLP-1, along with GLP-2 and oxyntomodulin, is produced in the intestinal L-cell via processing of proglucagon by prohormone convertase 1/3 (PC1/3), while in the pancreatic alpha-cell, coexpression of proglucagon and the alternate enzyme PC2 typically results in differential processing of proglucagon to yield glucagon. We used alginate-encapsulated alpha-cells as a model to evaluate continuous delivery of PC1/3- or PC2-derived proglucagon products. In high fat-fed and db/db mice, PC1/3-, but not PC2-expressing alpha-cells improved glucose handling and transiently lowered fasting glucose levels, suggesting that continuous delivery of PC1/3-derived proglucagon products via cell therapy may be useful for diabetes treatment. In addition, we show that long-term treatment with PC1/3-expressing, but not PC2-expressing, alpha-cells improved cold-induced thermogenesis in db/db mice, demonstrating a previously unappreciated effect of one or more PC1/3-derived alpha-cell products.