A thin-layer chromatography (TLC)-bioautographic method was developed with the aim to detect dipeptidyl peptidase IV (DPP IV) inhibitors from plant extracts. The basic principle of the method is that the enzyme (DPP IV) hydrolyzes substrate (Gly-Pro-p-nitroaniline) into p-nitroaniline (pNA), which diazotizes with sodium nitrite, and then reacts with N-(1-naphthyl) ethylenediamine dihydrochloride in turn to form a rose-red azo dye which provides a rose-red background on the TLC plates. The DPP IV inhibitors showed white spots on the background as they blocked enzymolysis of the substrate to produce pNA. The method was validated with respect to selectivity, sensitivity, linearity, precision, recovery, and stability after optimizing key parameters including plate type, time and temperature of incubation, concentration of substrate, enzyme and derivatization reagents, and absorption wavelength. The results showed good lineary within amounts over 0.01–0.1 μg range for the positive control, diprotin A, with the coefficient of determination (r2) = 0.9668. The limits of detection (LOD) and quantification (LOQ) were 5 and 10 ng, respectively. The recoveries ranged from 98.9% to 107.5%. The averages of the intra- and inter-plate reproducibility were in the range of 4.1–9.7% and 7.6–14.7%, respectively. Among the nine methanolic extracts of medicinal herbs screened for DPP IV inhibitors by the newly developed method, Peganum nigellastrum Bunge was found to have one white active spot, which was then isolated and identified as harmine. By spectrophotometric method, harmine hydrochloride was found to have DPP-IV inhibitory activity of 32.4% at 10 mM comparing to that of 54.8% at 50 μM for diprotin A.