Hyperglycemia-induced oxidative stress is a common phenomenon in diabetes. Since oxidative stress depletes adiponectin and insulin levels, we investigated whether an upregulated heme oxygenase (HO) system would attenuate the oxidative destruction of adiponectin/insulin and improve insulin sensitivity and glucose metabolism in streptozotocin (STZ)-induced type 1 diabetes. HO was upregulated with hemin (15 mg/kg ip) or inhibited with chromium mesoporphyrin (CrMP, 4 μmol/kg ip). Administering hemin to STZ-diabetic rats reduced hyperglycemia and improved glucose metabolism, whereas the HO inhibitor CrMP annulled the antidiabetic effects and/or exacerbated fasting/postprandial hyperglycemia. Interestingly, the antidiabetic effects of hemin lasted for 2 mo after termination of therapy and were accompanied by enhanced HO-1 and HO activity of the soleus muscle, along with potentiation of plasma antioxidants like bilirubin, ferritin, and superoxide dismutase, with corresponding elevation of the total antioxidant capacity. Importantly, hemin abated c-Jun NH2-terminal kinase (JNK), a substance known to inhibit insulin biosynthesis, and suppressed markers/mediators of oxidative stress including 8-isoprostane, nuclear-factor (NF)-κB, activating protein (AP)-1, and AP-2 of the soleus muscle. Furthermore, hemin therapy significantly attenuated pancreatic histopathological lesions including acinar cell necrosis, interstitial edema, vacuolization, fibrosis, and mononuclear cell infiltration. Correspondingly, hemin increased plasma insulin and potentiated agents implicated in insulin sensitization and insulin signaling such as adiponectin, adenosine monophosphate-activated protein kinase (AMPK), cAMP, cGMP, and glucose transporter (GLUT)4, a protein required for glucose uptake. These were accompanied by improved glucose tolerance [intraperitoneal glucose tolerance text (IPGTT)], decreased insulin intolerance [intraperitoneal insulin tolerance test (IPITT)], and reduced insulin resistance [homeostasis model assessment of insulin resistance (HOMA-IR) index], whereas CrMP nullified the hemin-dependent antidiabetic and insulin-sensitizing effects. In conclusion, by concomitantly enhancing insulin and paradoxically potentiating insulin sensitivity, this study unveils a novel, unique, and long-lasting antidiabetic characteristic of upregulating HO with hemin that could be exploited against insulin-resistant and insulin-dependent diabetes.