The mechanism of depression with type 2 diabetes remains elusive, requiring further study. Objective. To evaluate the effect of TCM formula Xiaoyaosan on depressive-like behaviors in rats with type 2 diabetes. Methods. Rats were divided into 5 groups and drugs were administered during the model period of 21 days. The model of depressive-like behaviors in rats with type 2 diabetes was induced by a high fat diet, low doses of STZ injection, and chronic restraint stress for 21 days. The body weight, fasting blood glucose, ITT, OGTT, 5-HT, DA, depression behaviors, and morphological changes of formation were measured and observed. Results. After modeling, marked changes were found in model rats; behavioral analyses of rats indicated that this modeling method negatively impacts locomotor function. In the H&E staining, changes were found predominately in the CA1 and DG subregions of the hippocampus. After 21 days of treatment by fluoxetine and Xiaoyaosan, rats' body weights, behaviors and fasting blood glucose, and hippocampal formation were modified. Conclusions. A new model of depressive-like behaviors in rats with type 2 diabetes was successfully created. Xiaoyaosan and fluoxetine in this study independently contribute to exacerbate the disease progression.