The rice fermented by Monascus, called red mold rice (RMR), and has a long tradition in East Asia as a dietary staple. Monascus-fermented dioscorea called red mold dioscorea (RMD) contains various metabolites to perform the ability of reducing oxidative stress and anti-inflammatory response. We used Wistar rats and induced diabetes by injecting streptozotocin (STZ, 65 mg/kg i.p.). RMD was administered daily starting six weeks after disease onset. Throughout the experimental period, significantly (P < .05) lowered plasma glucose, triglyceride, cholesterol, free fatty acid and low density lipoprotein levels were observed in the RMD-treated groups. The RMD-treated diabetic rats showed higher activities of glutathione disulfide reductase, glutathione reductase, catalase and superoxide dismutase (P < .05) in the pancreas compared with the diabetic control rats. RMD also inhibited diabetes-induced elevation in the levels of interleukin (IL)-1β, IL-6, interferon-γ and tumor necrosis factor-α. Pancreatic β-cells damaged by STZ in the RMD supplemented groups were ameliorated. The results of this study clearly demonstrated that RMD possesses several treatment-oriented properties, including the control of hyperglycemia, antioxidant effects, pancreatic β-cell protection and anti-inflammatory effects. Considering these observations, it appears that RMD may be a useful supplement to delay the development of diabetes and its complications.