The incidence of type 2 diabetes mellitus (T2DM) has been increasing in recent years and has become a serious threat to human health. Zengye Decoction (ZYD), a well-known traditional Chinese medicinal formula, has been used in the treatment of T2DM with yin asthenia and extreme heat since Qing Dynasty. However, the characteristics of antidiabetic activities of ZYD have not been fully elucidated. In our study, high-fat diet and streptozotocin were used to establish the T2DM rat model. After 3 weeks of treatment with ZYD, the fasting blood glucose (FBG), oral glucose tolerance, the fasting serum insulin concentration, insulin sensitivity index (ISI), serum lipid profiles, and pancreas histopathology were measured. Then, under circumstance of insulin-resistant glucose consumption, 2-(N-(7-nitrobenz-2-oxa-l,3-diazol-4-yl) amino)-2-deoxyglucose (2-NBDG) uptake and glycogen content in C2C12 myotubes, 3T3-L1 adipocytes, and HepG2 cells were determined, respectively. Finally, the expressions of key targets in the insulin signaling pathway were measured to explain the potential mechanism underlying these activities. After administration with ZYD, a notable reduction in FBG levels, oral glucose tolerance test-area under the curve, blood lipid metabolism, and ISI values were observed compared with the diabetic control group. Moreover, ZYD restored the damaged islet cells in T2DM rats. Significant increases in glucose consumption, glucose uptake, glycogen content, expression of glucose transporter type 4, and the ratio of p-Akt/Akt were observed in the ZYD groups. According to the above results, ZYD exhibited glucose disposal, including glucose consumption, glucose uptake, and glycogen content and promoted the Akt signal pathway, which indicates that ZYD exerts significant hypoglycemic effect in T2DM.