Compounds that are dual aP2/k-FABP inhibitors are provided having the formula ##STR1##

wherein A, B, X, Y, R¹, R² and R³ are as described herein. A method is also provided for treating diabetes and related diseases, especially Type II diabetes, employing dual aP2/k-FABP inhibitors alone or in combination with at least one other antidiabetic agent such as metformin, glyburide, troglitazone and/or insulin.