Delivery of therapeutic peptides upon oral administration is highly desired and investigations report that the cell-penetrating peptide (CPP) penetratin and its analogues shuffle and penetramax show potential as carriers to enhance insulin delivery. Exploring this, the specific aim of the present study was to understand the impact that their complexation with a lipidated or non-lipidated therapeutic cargo would have on the delivery, to evaluate the effect of differences in membrane interactions in vitro and in vivo, as well as to deduce the mode of action leading to enhanced delivery. Fundamental biophysical aspects were studied by a range of orthogonal methods. Transepithelial permeation of therapeutic peptide was evaluated using the Caco-2 cell culture model supplemented with epithelial integrity measurements, real-time assessment of the carrier peptide effects on cell viability and on mode of action. Pharmacokinetic and pharmacodynamic (PK/PD) parameters were evaluated following intestinal administration to rats and tissue effects were investigated by histology. The biophysical studies revealed complexation of insulin with shuffle and penetramax, but not with penetratin. This corresponded to enhanced transepithelial permeation of insulin, but not of lipidated insulin, when in physical mixture with shuffle or penetramax. The addition of shuffle and penetramax was associated with a lowering of Caco-2 cell monolayer integrity and viability, where the lowering of cell viability was immediate, but reversible. Insulin delivery in rats was enhanced by shuffle and penetramax and accompanied by a 10–20-fold decrease in blood glucose with immediate effect on the intestinal mucosa. In conclusion, shuffle and penetramax, but not penetratin, demonstrated to be potential candidates as carriers for transmucosal delivery of insulin upon oral administration, and their effect depended on association with both cargo and cell membrane. Interestingly, the present study provides novel mechanistic insight that peptide carrier-induced cargo permeation points towards enhancement via the paracellular route in the tight epithelium. This is different from the anticipated belief being that it is the cell-penetrating capability that facilitate transepithelial cargo permeation via a transcellular route.