Cytopiloyne was identified as a novel polyacetylenic compound. However, its antidiabetic properties are poorly understood. The aim of the present study was to investigate the anti-diabetic effect and mode of action of cytopiloyne on type 2 diabetes (T2D). We first evaluated the therapeutic effect of cytopiloyne on T2D in db/db mice. We found that one dose of cytopiloyne reduced postprandial glucose levels while increasing blood insulin levels. Accordingly, long-term treatment with cytopiloyne reduced postprandial blood glucose levels, increased blood insulin, improved glucose tolerance, suppressed the level of glycosylated hemoglobin A1c (HbA1c), and protected pancreatic islets in db/db mice. Next, we studied the anti-diabetic mechanism of action of cytopiloyne. We showed that cytopiloyne failed to decrease blood glucose in streptozocin- (STZ-)treated mice whose β cells were already destroyed. Additionally, cytopiloyne dose dependently increased insulin secretion and expression in β cells. The increase of insulin secretion/expression of cytopiloyne was regulated by protein kinase C α (PKC α ) and its activators, calcium, and diacylglycerol (DAG). Overall, our data suggest that cytopiloyne treats T2D via regulation of insulin production involving the calcium/DAG/PKC α cascade in β cells. These data thus identify the molecular mechanism of action of cytopiloyne and prove its therapeutic potential in T2D.