The management of diabetes without any side effects remains a challenge in medicine. In this study, antidiabetic activity and the mechanism of action of scorpion combined with gypsum (SG) were investigated. Streptozotocin-induced diabetic mice were orally administrated with scorpion (200 mg kg(-1) per day) in combination with gypsum (200 mg kg(-1) per day) for 5 weeks. SG treatment resulted in decreased body weight, blood glucose and lipid levels, and increased serum and pancreatic insulin levels in diabetic mice. Furthermore, SG significantly increased the number and volume of beta cells in the Islets of Langerhans and promoted peroxisome proliferator-activated receptor gamma and pancreatic duodenal homeobox 1 expressions in pancreatic tissues. However, scorpion or gypsum alone had no significant effect in this animal model. Metformin showed a slight or moderate effect in this diabetic model, but this effect was weak compared with that of SG. Taken together, SG showed a new antidiabetic effect in streptozotocin-induced diabetic mice. This effect may possibly be involved in enhancing beta-cell regeneration and promoting insulin secretion by targeting PPARγ and PDX-1. Moreover, this new effect of SG offers a promising step toward the treatment of diabetic patients with beta-cell failure as a complementary and alternative medicine.