Exhibit 10.21

December 19, 2008

Terrance Gregg

c/o DexCom, Inc.

6340 Sequence Drive

San Diego, California 92121

Re: Second Amended and Restated Employment Agreement

Dear Terry,

This letter agreement (“Agreement”) will set forth the amended terms of your employment with DexCom, Inc. (the “Company”) as its President and Chief Executive Officer.

You will be expected to diligently perform various duties consistent with your position. You will work at our offices located at 6340 Sequence Drive, San Diego, California. Your first day of employment is June 19, 2007 (the “Employment Date”).

Your base salary to start was $400,000 per year, and was subsequently increased to $420,000 per year, (to be paid out according to the Company’s regular payroll schedule less payroll deductions and all required withholdings). You will also be eligible for an annual target bonus of up to fifty percent (50%) of your base salary based on performance objectives determined by the Compensation Committee after consultation with you.

The Company’s Compensation Committee has approved the grant to you, effective with the Employment Date, of a stock option to purchase 962,000 shares of the Company’s Common Stock (the “Initial Option”) under its 2005 Equity Incentive Plan (the “Plan”), 58,392 of which shall be “incentive stock options” within the meaning of the Internal Revenue Code of 1986, as amended (the “Code”). The Compensation Committee has also approved the grant to you of an additional stock option to purchase 393,000 shares, of the Company’s Common Stock (the “Additional Option”) under the Plan (which shall be “incentive stock options” to the maximum extent permissible) effective on January 2, 2008 (the “Additional Option Grant Date”). The exercise price per share of the Initial Option is the fair market value of a share of the Company’s Common Stock equal to the closing price of DexCom Common Stock on the Nasdaq Global Market on the Employment Date. The exercise price per share of the Additional Option is the fair market value of a share of the Company’s Common Stock equal to the closing price of DexCom Common Stock on the Nasdaq Global Market on the Additional Option Grant Date. The Initial Option shall vest and become exercisable in thirty-six (36) equal monthly installments from the Employment Date, subject to your remaining in continuous service throughout the vesting period. The Additional Option shall vest and become exercisable in thirty (30) equal monthly installments from the Additional Option Grant Date, subject to your remaining in continuous service throughout the vesting period. The other terms of the Initial Option and the Additional Option are as set forth in the Company’s standard form of stock option agreement, the Plan, and the Executive Change of Control Agreement between you and the Company.

As a Company employee, you will be expected to abide by the Company’s Proprietary Information and Inventions Agreement and the Company rules and regulations and acknowledge in writing that you have read the Company’s Employee Handbook, which will govern the terms and conditions of your employment. The Company’s Employee Handbook may be modified from time to time at the sole discretion of the Company.

Your employment with the Company is not for a guaranteed or definite period of time. Rather, the employment relationship is “at will.” This means that you may terminate your employment with the Company at any time and for any reason whatsoever simply by notifying the Company. Likewise, the Company may terminate your employment at any time and for any reason whatsoever, with or without “cause” or advance notice. Should the Company terminate your employment at any time without “cause,” or if you

terminate your employment due to a “constructive termination,” then, in either case, subject to your execution of a release of claims in form satisfactory to the Company (including your satisfaction of all requirements to make the release effective), you will be entitled to (i) a lump sum payment equivalent to 12 months base salary, (ii) 12 months vesting acceleration with respect to the Initial Option and the Additional Option and (iii) 12 months vesting acceleration with respect to the Additional Bonus Any payment of the amount set forth in (i) above will be made 60 days following your termination of employment.

Should you elect to voluntarily terminate your employment for any reason other than “constructive termination,” you will not be eligible for any severance or accelerated vesting of the Initial Option or the Additional Option. Your employment may be terminated for “cause” only if you have engaged in (i) willful misconduct or gross negligence in the performance of your duties; (ii) a material breach of your Proprietary Information and Inventions Agreement, the Employee Handbook or other Company policy; or (iii) the commission of a felony affecting the Company or its business. You may voluntarily terminate your employment within 90 days following a “constructive termination,” which will occur if either (i) your title or your annual salary and bonus potential are materially reduced from that set forth herein or (ii) the headquarters of the Company is moved more than 50 miles from its present location; provided in either case that you give notice of such constructive termination within 30 days of the occurrence of such event and afford the Company 30 days in which to remedy the constructive termination. Notwithstanding anything else provided herein, to the extent any payments provided under this Agreement in connection with your termination of employment constitute deferred compensation subject to Section 409A of the Code “Section 409A”) and you are deemed at the time of such termination of employment to be a “specified” employee under Section 409A, then such payment shall not be made or commence until the earlier of (i) the expiration of the 6-month period measured from your “separation from service” from the Company (as such term is defined in Treasury Regulations under Section 409A) or (ii) the date of your death following such a separation from service. For purposes of this Agreement, a termination of employment shall mean a “separation from service” within the meaning of Section 409A and Section 1.409A-1(h) of the Treasury Regulations promulgated under Section 409A. This at-will employment relationship cannot be changed except in a writing signed by a duly authorized Company officer.

This Agreement, together with your Proprietary Information and Inventions Agreement, the Employee Handbook and the Executive Change of Control Agreement, forms the complete and exclusive statement of the terms of your employment with the Company. The employment terms in this Agreement supersede any other agreements or promises made to you by anyone on behalf of the Company, whether oral or written, including the Agreement executed on June 19, 2007. This Agreement will be binding and shall inure to the benefit of the Company, its successors, and its assigns. The term “Company” as used herein shall include such successors and assigns to the extent applicable.

Sincerely,

/s/ Donald L. Lucas

Donald L. Lucas

Chairman of the Board

Accepted and agreed

/s/ Terrance H. Gregg

Terrance H. Gregg

December 19, 2008