Novel dipeptidyl peptidase IV (DPP-IV) inhibitors with a phenethylphenylphthalimide skeleton were prepared based on α-glucosidase inhibitors and liver X receptor (LXR) antagonists derived from thalidomide. Representative compounds showed non-competitive inhibition of DPP-IV and 28a exhibited 10-fold selectivity for DPP-IV over DPP-8. Compound 28a is the first non-competitive, selective DPP-IV inhibitor.