This study examined the anti-diabetic effect of onion (Allium cepa. Linn) in the streptozotocin (STZ)-induced diabetic rats. Male Sprague-Dawley rats were divided into normal rats fed control diet or supplemented with onion powder (7% w/w) and diabetic rats fed control diet or supplemented with onion powder. Diabetes was induced by a single injection of STZ (60 mg/kg, ip) in citrate buffer. The animals were fed each of the experimental diet for 5 weeks. Blood glucose levels of rats supplemented with onion were lower than those of rats fed control diet in the diabetic rats. Onion also decreased the total serum lipid, triglyceride, and atherogenic index and increased HDL-cholesterol/total cholesterol ratio in the diabetic rats. Glutathione peroxidase, glutathione reductase and glutathione S-transferase activities were high in the diabetic rats compared to normal rats and reverted to near-control values by onion. These results indicate that onion decreased blood glucose, serum lipid levels and reduced renal oxidative stress in STZ-induced diabetic rats and this effect might exert the anti-diabetic effect of onion.