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An intricate relationship between gut microbiota, diet, and the human body has recently been extensively investigated. Gut microbiota and gut-derived metabolites, especially, tryptophan derivatives, modulate metabolic and immune functions in health and disease. One of the tryptophan derivatives, indolepropionic acid (IPA), is increasingly being studied as a marker for the onset and development of metabolic disorders, including type 2 diabetes (T2D) and non-alcoholic fatty liver disease (NAFLD). The IPA levels heavily depend on the diet, particularly dietary fiber, and show huge variations among individuals. We suggest that these variations could partially be explained using genetic variants known to be associated with specific diseases such as T2D. In this narrative review, we elaborate on the beneficial effects of IPA in the mitigation of T2D and NAFLD, and further study the putative interactions between IPA and well-known genetic variants (TCF7L2, FTO, and PPARG), known to be associated with the risk of T2D. We have investigated the long-term preventive value of IPA in the development of T2D in the Finnish prediabetic population and the correlation of IPA with phytosterols in obese individuals from an ongoing Kuopio obesity surgery study. The diversity in IPA-linked mechanisms affecting glucose metabolism and liver fibrosis makes it a unique small metabolite and a promising candidate for the reversal or management of metabolic disorders, mainly T2D and NAFLD.