In the present study, male diabetic KK-A(y) mice were used to investigate the antidiabetic effect of bayberry fruit extract (BFE, 200 mg kg(-1)) by gavage for 5 weeks. BFE significantly lowered fasting blood glucose, improved glucose tolerance and insulin sensitivity in KK-A(y) mice. It significantly reduced serum concentrations of glucose, lipids, inflammation, and liver function markers, including insulin, glucagon, leptin, total cholesterol, triglycerides, low density lipoprotein, interleukin-1β, and alanine transferase in KK-A(y) mice. Liver weight and liver lipid accumulation were also markedly reduced by BFE in mice. The hypoglycemic effect of BFE appeared to be partially mediated through the inhibition of hepatic gluconeogenesis, which was supported by the reduced PPARγ coactivator 1-alpha (PGC-1α) and phosphoenolpyruvate carboxykinase (PEPCK) mRNA expressions in the liver of KK-A(y) mice and by the decreased glucose production, increased glycolysis as well as the reduced gene expression levels of PGC-1α, PEPCK, and glucose-6-phosphatase (G6Pase) in HepG2 cells. Gene expressions of hepatic lipid metabolism and inflammatory markers were also down-regulated by BFE in the liver of KK-A(y) mice. Furthermore, BFE promoted hepatic phosphorylation of AMPKα (Thr172) both in vivo and in vitro. Therefore, the activation of the AMPK pathway may play an important role in the antidiabetic effects of BFE, and red Chinese bayberry fruits may be an effective dietary food for the management of type 2 diabetes and its complications.