This study was initiated to determine the possible antidiabetic effects of total flavonoids of Litsea Coreana leve (TFLC), an alcohol extract from the dried leaves of Litsea Coreana leve, on type 2 diabetic rats. Male Sprague-Dawley rats (n = 40, 160-180 g) were divided into two groups and fed with normal chow diet (Normal Control group) or high-fat diet (HFD) for a period of 4 weeks. After 4 weeks of dietary manipulation, the HFD-fed rats were injected with 30 mg/kg streptozocin (STZ) to induce diabetes 72 hours after STZ injection. These diabetic rats were randomly divided into 3 groups (n = 10): Diabetic Control group, Diabetic + TFLC group and Diabetic + PIO group. Diabetic + TFLC group and Diabetic + PIO group were orally administered with 400 mg/kg TFLC or 10 mg/kg pioglitazone (all suspended in 0.5% CMC-Na) respectively for 6 weeks. All rats were examined for body weight, serum and hepatic biochemical indices, content of malondialdehyde (MDA), activities of superoxide dismutase (SOD) and pathological changes in liver and pancreas, as well as protein tyrosine phosphatase 1B (PTP1B) expression in liver. The diabetic rats became obese, insulin resistant, hyperglycemic and hyperlipidemic. Treatment with TFLC showed a significant increase in insulin sensitivity, serum HDL-C level and SOD activities, meanwhile marked decrease in body weight, serum FFA, TC, TG, LDL-C, CRP, MDA content. TFLC also attenuated pathologic alterations in liver and pancreatic islet. Furthermore, TFLC was found to decrease the expression of PTP1B in diabetic rat liver. These results suggested that TFLC could ameliorate hyperglycemia, hyperlipoidemia, inflammation and oxidation stress, as well as insulin resistance of type 2 diabetic rats.