Insulin-degrading enzyme (IDE) is an atypical zinc-metalloendopeptidase that hydrolyzes insulin and other intermediate-sized peptide hormones, many of which are implicated in skin health and wound healing. Pharmacological inhibitors of IDE administered internally have been shown to slow the breakdown of insulin and thereby potentiate insulin action. Given the importance of insulin and other IDE substrates for a variety of dermatological processes, pharmacological inhibitors of IDE suitable for topical applications would be expected to hold significant therapeutic and cosmetic potential. Existing IDE inhibitors, however, are prohibitively expensive, difficult to synthesize and of undetermined toxicity. Here we used phage display to discover novel peptidic inhibitors of IDE, which were subsequently characterized in vitro and in cell culture assays. Among several peptide sequences tested, a cyclic dodecapeptide dubbed P12-3A was found to potently inhibit the degradation of insulin (Ki = 2.5 ± 0.31 μM) and other substrates by IDE, while also being resistant to degradation, stable in biological milieu, and highly selective for IDE. In cell culture, P12-3A was shown to potentiate several insulin-induced processes, including the transcription, translation and secretion of alpha-1 type I collagen in primary murine skin fibroblasts, and the migration of keratinocytes in a scratch wound migration assay. By virtue of its potency, stability, specificity for IDE, low cost of synthesis, and demonstrated ability to potentiate insulin-induced processes involved in wound healing and skin health, P12-3A holds significant therapeutic and cosmetic potential for topical applications.