The antihyperglycaemic and antilipidperoxidative effects of the ethanol extract from the dry matter of a culture broth (DMCB) of Inonotus obliquus were investigated in alloxan-induced diabetic mice and the possible mechanism of action was also discussed. In alloxan-induced diabetic mice, treatment with the ethanol extract from DMCB of I. obliquus (30 and 60 mg kg(-1) body weight (b.w.) for 21 days) showed a significant decrease in blood glucose level: the percentage reductions on the 7th day were 11.54 and 11.15%, respectively. However, feeding of this drug for three weeks produced reduction of 22.51 and 24.32%. Furthermore, the ethanol extract from the DMCB of I. obliquus treatment significantly decreased serum contents of free fatty acids, total cholesterol, triglycerides and low-density lipoprotein-cholesterol, whereas it effectively increased high-density lipoprotein-cholesterol, insulin levels and hepatic glycogen contents in livers of diabetic mice. Besides this, the ethanol extracts from the DMCB treatment significantly increased catalase, superoxide dismutase and glutathione peroxidase activities, except for decreasing the maleic dialdehyde level in diabetic mice. Histological morphology examination showed that the ethanol extract from the DMCB of I. obliquus restored the damage of pancreatic tissues in mice with diabetes mellitus. The results showed that the ethanol extract from the DMCB of I. obliquus possesses significant antihyperglycaemic, antilipidperoxidative and antioxidant effects in alloxan-induced diabetic mice.