Based on high throughput screening of our chemical library, we identified two 4,5-dihydro-2H-benzo[e]indazole derivatives (5d and 5g), which displayed a significant effect on glucose uptake in L6 skeletal muscle cells. Based on these lead molecules, a series of benzo[e]indazole derivatives were prepared. Among all the synthesized dihydro-2H-benzo[e]indazoles, 8-(methylthio)-2-phenyl-6-p-tolyl-4,5-dihydro-2H-benzo[e]indazole-9-carboxylate (5e) showed significant glucose uptake stimulation in L6 skeletal muscle cells, even better than lead compounds. Additionally, 5e decreased glucagon-induced glucose release in HepG2 hepatoma cells. The 2H-benzo[e]indazole 5e exerted an antihyperglycemic effect in normal, sucrose challenged streptozotocin-induced diabetic rats and type 2 diabetic db/db mice. Treatment with 5e at a dose of 30 mg kg-1 in db/db mice caused a significant decrease in triglyceride and total cholesterol levels and increased the HDL-C level in a significant manner. The mechanistic studies revealed that the 2H-benzo[e]indazole 5e significantly stimulated insulin-induced signaling at the level of IRS-1, Akt and GSK-3β in L6 skeletal muscle cells, possibly by inhibiting protein tyrosine phosphatase-1B. This new 2H-benzo[e]indazole derivative has potential for the treatment of diabetes with improved lipid profile.