Cordyceps is reputed for its broad biological activities and as a tonic for replenishing vital function in Chinese traditional medicines. As an attempt to obtain fundamental data for the development of a new type Cordyceps, the effects of the fruiting bodies of cultivated fungus of Paecilomyces japonica grown on silkworm larvae on hyperglycemia induced by streptozotocin(STZ) and by epinephrine in rats and in mice as well as on immunological functions in mice were investigated. The 70% methanol extract of the fungus, when administered orally at 100 and 300 mg/kg in STZ-induced hyperglycemic rats, caused a significant decrease in blood glucose level 3hr after sample treatments. The methanol extract, when administered p.o. at the same dose levels in epinephrine-induced hyperglycemic mice, also caused a significant decrease in serum glucose levels as well as a significant reversal of the liver glycogen contents suggesting its hypoglycemic activity might be due to glycogen breakdown in the liver. Treatment of normoglycaemic mice with the methanol extract of the fungus exhibited a significant glucose tolerance up to 3hr after oral glucose load(2.0 g/kg). The methanol extract also showed immuno-stimulating activity as measured by carbon clearance in mice and a significant antifatigue effect as measured by weight loaded forced swimming performance in mice.