The objective of this study was to determine the anti-diabetic effect of the water extract of Neolentinus lepideus in a diabetic mouse model. Seven-week-old C57BL/KsJ-db/db mice were fed either a control diet (CD) or diet supplemented with 1% or 5% of N. lepideus water extract (NLWE1 or NLWE5) for 10 weeks. Oral administration of NLWE significantly decreased the body weight gain compared to that of CD-fed group. Mice in the NLWE group had significantly lower levels of fasting serum glucose, fatty acids, and low-density lipoprotein cholesterol compared to those in the control group. These effects were accompanied by reduced fatty liver and improved glucose tolerance in the NLWE group. Taken together, these results suggest that N. lepideus might have potential as a dietary supplement to control diabetes.