Traditional Chinese medicine (TCM) performs a good clinical practice and is showing a bright future in the treatment of diabetes mellitus (DM). TCM treatment has certain advantages of less toxicity and/or side effects, and herbs could provide multiple therapeutic effects. Berberine (BBR) is a classical natural medicine. In this review, we summarize the application of BBR in the treatment of DM from two aspects. First, modern pharmacological effects of BBR on glucose metabolism are summarized, such as improving insulin resistance, promoting insulin secretion, inhibiting gluconeogenesis in liver, stimulating glycolysis in peripheral tissue cells, modulating gut microbiota, reducing intestinal absorption of glucose, and regulating lipid metabolism. BBR is used to treat diabetic nephropathy (DPN), diabetic neuropathy (DN), and diabetic cardiomyopathy due to its antioxidant and anti-inflammatory activities. Second, the clinical application of BBR is reviewed, such as listing some clinical trials on the effectiveness and safety of BBR, explaining applicable stage and syndrome, the reasonable dose and dose formulation, and the toxicity and/or side effects. This review provides scientific evidence about BBR, as well as introducing some traditional Chinese medical theory and clinical experience, in order to guide clinician to use BBR more suitably and reasonably.