Eugenosedin-A (Eu-A) has been shown to protect against hyperglycemia- and hyperlipidemia-induced metabolic syndrome. We investigated the relationship of KATP channel activities and insulin secretion by Eu-A in vitro in pancreatic β-cells, and examined the effect of Eu-A on streptozotocin (STZ)/nicotinamide (NA)-induced type 2 diabetes mellitus (T2DM) in vivo. We isolated pancreatic islets from adult male Wistar rats (250–350 g) and identified pancreatic β-cells by the cell size, capacitance and membrane potential. Perforated patch-clamp and inside-out recordings were used to monitor the membrane potential (current-clamp mode) and channel activity (voltage-clamp mode) of β-cells. The membrane potential of β-cells was raised by Eu-A and reversed by the KATP channel activator diazoxide. Eu-A inhibited the KATP channel activity measured at − 60 mV and increased the intracellular calcium concentration ([Ca2+]i), resulting in enhanced insulin secretion. Eu-A also reduced Kir6.2 protein on the cell membrane and scattered in the cytosol under normal glucose conditions (5.6 mM). In our animal study, rats were divided into normal and STZ/NA-induced T2DM groups. Normal rats fed with regular chow were divided into control and control+Eu-A (5 mg/kg/day, i.p.) groups. The STZ/NA-induced diabetic rats fed with a high-fat diet (HFD) were divided into three groups: T2DM, T2DM+Eu-A (5 mg/kg/day, i.p.), and T2DM+glibenclamide (0.5 mg/kg/day, i.p.; a KATP channel inhibitor). Both Eu-A and glibenclamide decreased the rats’ blood glucose, prevented weight gain, and enhanced insulin secretion. We found that Eu-A blocked pancreatic β-cell KATP channels, caused membrane potential depolarization, and stimulated Ca2+ influx, thus increasing insulin secretion. Furthermore, Eu-A decreased blood glucose and increased insulin levels in T2DM rats. These results suggested that Eu-A might have clinical benefits for the control of T2DM and its complications.