In previous study, the anti-diabetic effect of Cinnamomi Cassiae extract (Cinnamon bark: Lauraceae) in a type II diabetic animal model (C57BIKsj db/db) has been reported. To explore their mechanism of action, in present study, the effect of cinnamon extract on anti-hyperglycemia and anti-hyperlipidemia was evaluated by measuring the blood glucose levels, serum insulin, and adiponectin levels, serum and hepatic lipids, PPARalpha mRNA expression in liver and PPARgamma mRNA expression in adipose tissue, respectively. Male C57BIKs db/db mice were divided into a diabetic group and cinnamon extract treated group and examined for a period of 12 weeks (200 mg/kg, p.o). The fasting blood glucose and postprandial 2 h blood glucose levels in the cinnamon treated group were significantly lower than those in the control group (p < 0.01), whereas the serum insulin and adiponectin levels were significantly higher in the cinnamon treated group than in the control group (p < 0.05). The serum lipids and hepatic lipids were improved in the cinnamon administered group. Also the PPARalpha mRNA (liver) and PPARgamma mRNA (adipose tissue) expression levels were increased significantly in the cinnamon treated group (p < 0.05). Our results suggest that cinnamon extract significantly increases insulin sensitivity, reduces serum, and hepatic lipids, and improves hyperglycemia and hyperlipidemia possibly by regulating the PPAR-medicated glucose and lipid metabolism.