This study was undertaken to investigate the protective effect against alloxan-induced pancreatic islets damage by Ganoderma lucidum Polysaccharides (Gl-PS) isolated from the fruiting body of Ganoderma lucidum (Leyss. ex Fr.) Karst. In vitro, alloxan caused dose-dependent toxicity on the isolated pancreatic islets. Pre-treatment of islets with Gl-PS for 12 h and 24 h significantly reversed alloxan-induced islets viability loss. Gl-PS was also found to inhibit the free radicals production induced by alloxan in the isolated pancreatic islets using confocal microscopy. Gl-PS dose-dependently increased serum insulin and reduced serum glucose levels when pretreated intragastrically for 10 days in alloxan-induced diabetic mice. It was found that the pancreas homogenates had higher lipid peroxidation products in alloxan-treated mice than in the Gl-PS-treated animals. Aldehyde fuchsin staining revealed that alloxan caused nearly all the beta cells disappearing from the pancreatic islets, while Gl-PS partly protected the beta cells from necrosis. Alloxan (60 mg/kg) induced NF-kappa B activation in the pancreas at 30 min after injection, pretreatment with Gl-PS inhibited alloxan-induced activation of NF-kappa B. These results suggest that Gl-PS was useful in protecting against alloxan-induced pancreatic islets damage in vitro and in vivo; one of the mechanisms is through its scavenging ability to protect the pancreatic islets from free radicals-damage induced by alloxan.