The purpose of this study was to examine the effects of Atractylodes lancea (A.l.) in a dose-dependent manner on lipid levels and plasma glucose in diabetic rats induced with streptozotocin (STZ). The Sprague-Dawley rats were randomly classified into five groups: normal, STZ-control and three experimental groups [A.l.-1, diabetic treated with ethanolic extract of A.l. (1 g/kg b.w.), A.l.-2, diabetic administered with ethanolic extract of A.l. (2 g/kg b.w.), and A.l.-3, diabetic administered with ethanolic extract of A.l. (3 g/kg b.w.)]. The normal and STZ-control group were fed an AIN-93 diet and the three experimental groups were administered with A.l. extract at doses of 1, 2, and 3 g/kg b.w./day, respectively, for 14 days. The plasma glucose levels in all the experimental groups were significantly lower than the STZ-control group after 14 days of treatment. The total cholesterol of the A.l.-3 and triglyceride levels, atherogenic index (AI) of all three experimental groups were significantly lower than the STZ-control group. The ALT and AST activities at A.l.-2, A.l.-3 were significantly lower than the STZ-control group. This result that demonstrate the administration of Atractylodes lancea can reduce hyperglycemia and hyperlipidemia risk in diabetic rats.