Current drugs help manage the symptoms, but do not prevent brain cells dying.
The trial on 62 patients, published in the Lancet, hints the medicine halted the progression of the disease.
The University College London (UCL) team is "excited", but it urges caution as any long-term benefit is uncertain and the drug needs more testing.
"There's absolutely no doubt the most important unmet need in Parkinson's is a drug to slow down disease progression, it's unarguable," Prof Tom Foltynie, one of the researchers, told the BBC.
In Parkinson's, the brain is progressively damaged and the cells that produce the hormone dopamine are lost.
It leads to a tremor, difficulty moving and eventually memory problems.
Therapies help manage symptoms by boosting dopamine levels, but the death of the brain continues and the disease gets worse.
No drug stops that happening.
In the trial, half of patients were given the diabetes drug exenatide and the rest were given a placebo (dummy treatment). All the patients stayed on their usual medication.
As expected, those on just their usual medication declined over 48 weeks of treatment. But those given exenatide were stable.
And three months after the experimental treatment stopped, those who had been taking exenatide were still better off.
Prof Foltynie told the BBC News website: "This is the first clinical trial in actual patients with Parkinson's where there has been anything like this size of effect.
"It gives us confidence exenatide is not just masking symptoms, it's doing something to the underlying disease.
"We have to be excited and encouraged, but also cautious as we need to replicate these findings."
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They also need to trial the drug for much longer periods of time.
An effective drug would need to hold back the disease for years in order to make a significant difference to patients.
Parkinson's progresses slowly and the difference in this 60-week trial was definitely there, but was "trivial" in terms of the impact on day-to-day life, say the researchers.
The drug helps control blood sugar levels in diabetes by acting on a hormone sensor called GLP-1.
Those sensors are found in brain cells too. It is thought the drug makes those cells work more efficiently or helps them to survive.
It is why the drug is being tested in other neurodegenerative diseases including Alzheimer's.
David Dexter, the deputy director of research at Parkinson's UK, said: "The findings offer hope that drugs like exenatide can slow the course of Parkinson's - something no current treatment can do.
"Because Parkinson's can progress quite gradually, this study was probably too small and short to tell us whether exenatide can halt the progression of the condition, but it's certainly encouraging and warrants further investigation."
Dr Brian Fiske, from the The Michael J Fox Foundation for Parkinson's Research, said: "The results from the exenatide studies justify continued testing, but clinicians and patients are urged not to add exenatide to their regimens until more is known about their safety and impact on Parkinson's."