The hypoglycemic effect of the crude extracellular polysaccharides (EPS) produced from submerged mycelial culture of an edible mushroomLaetiporus sulphureus var. miniatus in streptozotocin (STZ)-induced diabetic rat was investigated. Hypoglycemic effect of EPS was evaluated in STZ-induced diabetic rats, and its possible mechanism was suggested by the results of western blot analysis and immunohistochemical staining. The results revealed that orally administrated EPS, when given 48 h after STZ treatment exhibited an excellent hypoglycemic effect, lowering the average plasma glucose level in EPS-fed rats to 43.5% of STZ-treated rats. The plasma levels of total cholesterol and triglyceride were significantly increased upon STZ treatment and they were markedly reduced by oral administration of EPS to near-normal levels. The results of immunohistochemical staining of the pancreatic tissues showed that EPS treatment considerably increased the insulin antigenesity of diabetic islet ${eta}$-cells, suggesting the possibility of ${eta}$-cell proliferation or regeneration by EPS therapy. Moreover, immunoblotting study revealed that protein levels of iNOS was increased and SOD2, catalase, GPx were significantly increased after EPS treatments, suggesting alleviated oxidative stress mediated by STZ. Orally administrated EPS exhibited considerable hypoglycemic effect in STZ-induced diabetic rats and that these EPS may be useful for the management of diabetes mellitus.