The effect of water extract composed of panax ginseng radix rubra, acanthopanacis cortex, and cordyceps (PAC) on diabetic animal models were investigated in two different diabetic animal models. FAC water extract significantly reduced the plasma glucose levels on day 30 as compared with the diabetic control group in $KKA^Y$ obese, hyperglycemic and hyperglycemic and hyperinsulinemic mice, and also reduced the plasma glucose levels as well as total cholesterol in multiple low dose (MLD) strep tozotocin-induced diabetic SD rats. PAC water extract also showed an inhibitory effect on reduction of body weight and on development of MLD STZ-induced diabetic state. Elevated kidney hypertrophy, which is a characteristic feature shown in early stage of diabetic nephropathy and calculated as the ratio of kidney mass (g) relative to the body weight (g), was also markedly improved in PAC water extract- treated group as compared to the diabetic control group. Taken together, these data suggest that PAC water extract may have a potential as a antidiabetic agent in type 2 diabetes mellitus.