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Prolonged half-life of protein-based therapeutics can improve drug efficacy. However, the impact of drug half-life on gene therapy, which inherently provides long-lasting production of the desired therapeutic protein, remains unclear. In this study, several proteins with extended half-lives were engineered by fusion with the soluble monomeric immunoglobulin G 1 (IgG1) fragment crystallizable (sFc) or Fc region of IgG in adeno-associated virus (AAV)-delivered gene therapy. It was demonstrated that extending the half-life of a small-sized bifunctional protein and fibroblast growth factor 21 (FGF21) significantly increased their concentrations in the bloodstream circulation. Moreover, the half-life extension of AAV-delivered FGF21 resulted in a remarkable reduction in liver injury and blood glucose, and improved glucose tolerance and insulin sensitivity in type 2 diabetes mellitus animal models. These results demonstrate the therapeutic potential of gene therapy with prolonged drug half-life in the treatment of human diseases.