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Due to its pharmacological activities, Paecilomyces tenuipes has previously been used as a folk medicine in Asia. The primary aim of the present study was to investigate the hypoglycemic, hypolipidemic and anti‑nephritic effects of P. tenuipes N45 aqueous extracts (PTNE) in a high fat diet/streptozotocin‑induced diabetic rat model. The rats were treated with 120 mg/kg of metformin or 0.04, 0.2 or 1.0 g/kg PTNE for 4 weeks. The hypoglycemic activity of PTNE was confirmed by the observation of reduced fasting blood glucose level and by partially normalized oral glucose tolerance. PTNE reduced total cholesterol and triglyceride content, and balanced the levels of low‑density and high‑density lipoproteins. The suppressive effects of PTNE on creatinine, blood urea nitrogen, interleukin (IL)‑2, IL‑6 and nuclear factor‑κB levels indicated its ability to provide protection against diabetic nephropathy. PTNE treatment increased superoxide dismutase, malondialdehyde and glutathione peroxidase levels, suggesting that its anti‑diabetic and anti‑nephropathic activities may be associated with the prevention of oxidative damage during type 2 diabetic mellitus. The findings of the present study provided experimental evidence for the application of Paecilomyces tenuipes N45 on the treatment of type 2 diabetic mellitus.