The present study was designed to investigate the antidiabetic effect of nerolidol on high-fat diet and streptozotocin-induced diabetic rats. Type 2 diabetes was induced in animals by feeding them a high-fat diet for 4 weeks and administering a single intraperitoneal dose of streptozotocin (35 mg/kg body weight). Diabetic rats were treated with nerolidol (25 mg/kg BW) for 28 days. Results showed that nerolidol treatment significantly reduced ( p < 0.05) the level of elevated glucose, glycosylated hemoglobin and improved ( p < 0.05) the body weight and insulin level. Nerolidol also considerably improved ( p < 0.05) the carbohydrate metabolic enzyme activities and increased the glycogen storage in the liver of diabetic rats. Increased serum triglycerides, total cholesterol (C), low-density lipoproteins-C and very low-density lipoproteins-C levels were significantly lowered ( p < 0.05), while reduction of serum high-density lipoprotein-C was alleviated after administration of nerolidol. In addition, nerolidol attenuated oxidative stress markers by significantly increasing ( p < 0.05) the levels of superoxide dismutase, catalase, reduced glutathione, and lowering ( p < 0.05) the level of thiobarbituric acid reactive substances, and lipid hydroperoxide. Similarly, nerolidol showed its pharmacological effects against hepatic markers via restoring ( p < 0.05) the alleviated level of alanine transaminase, aspartate aminotransferase, and alkaline phosphatase. Finally, it improved insulin-dependent glucose transport in skeletal muscle by enhancing and activating glucose transporter protein-4. These findings confirmed the antidiabetic potential of nerolidol in type 2 diabetic rats. This may be related to a high antioxidant capacity, the restoration of plasma insulin and lipid levels, and the activation of insulin signaling in STZ/HFD-induced diabetic rats.