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Mulberry leaf is a traditional medicine used to treat diabetes in the clinic. The aim of this study was to determine the mechanisms by which mulberry leaf polysaccharide (MLPII), improves hepatic glucose metabolism and insulin resistance in rats with type 2 diabetes induced by high fat and streptozotocin (STZ). MLPII was administered for 6 weeks after establishment of type 2 diabetes in Wistar rats. At the end of the experiment, oral glucose tolerance, liver glycogen content, glucose synthase (GS) activity and insulin resistance were determined. Expression patterns of proteins and genes associated with insulin signaling as well as biomarkers of oxidative stress and antioxidant enzyme activities were assayed. Compared with normal control rats, MLPII treatment significantly improved oral glucose tolerance ( P < 0.01) and restored the glycogen level ( P < 0.01) and GS activity ( P < 0.05) in diabetic rats. Insulin resistance was improved in MLPII-treated diabetic rats ( P < 0.01). Furthermore, expression levels of insulin receptor substrate 2 (IRS2), phosphatidylinositol 3-kinase (PI3K) and protein kinase B (PKB/AKT) involved in insulin signaling were significantly increased ( P < 0.01), while protein–tyrosine phosphatase 1B (PTP1B) expression was markedly reduced ( P < 0.01). The levels of 8-hydroxy-2-deoxyguanosine (8-OHdG) and malondialdehyde (MDA) in livers of the MLPII-treated group were significantly reduced ( P < 0.01), while activities of the antioxidant enzymes, superoxide dismutase (SOD), catalase (CAT) and glutathione peroxidase (GPx), were significantly increased ( P < 0.01, P < 0.01, P < 0.01, respectively). The results clearly indicate that MLPII treatment effectively normalizes hepatic glucose metabolism and insulin signaling by inhibiting the expression of PTP1B, activating the PI3K–AKT pathway and mitigating oxidative stress in the livers of rats with type 2 diabetes induced by high fat and STZ. [ABSTRACT FROM AUTHOR]