The present invention is related to the G-protein coupled orphan receptor GPR43 and the identification of short chain fatty acids as natural ligands of the receptor. The invention further relates to assays for the identification of agents that modulate GPR43 ligand binding and signaling activity, as well as compositions consisting essentially of an isolated GPR43 polypeptide and an isolated short chain fatty acid. The invention also relates to diagnostic methods and kits that take advantage of the novel interaction of GPR43 with short chain fatty acids.