A water-soluble polysaccharide from the green alga Chaetomorpha linum, designated CHS2, was obtained by water extraction, preparative anion-exchange and size-exclusion chromatography. Results of chemical and spectroscopic analyses showed that CHS2 was a sulfated rhamnogalactoarabinan, and its backbone was mainly constituted by 4-linked and 3,4-linked β-l-arabinopyranose with sulfate groups at C-2/C-3 of 4-linked β-l-arabinopyranose. The branching contained 4-linked, 6-linked β-d-galactopyranose and terminal rhamnose residues. Based on the inhibition of human islet amyloid polypeptide (hIAPP) aggregation and morphology change of hIAPP aggregates in in vitro tests, it was proved that CHS2 effectively inhibited the hIAPP aggregation and possessed strong antidiabetic activity. CHS2 was nearly no toxicity in NIT-1 cells and could attenuate hIAPP-induced cytotoxicity. CHS2 may significantly reduce the generation of intracellular reactive oxygen species and hIAPP aggregation-induced oxidative stress in NIT-1 cells. CHS2 was co-localized with mitochondria, and largely protected mitochondria function from hIAPP aggregation-induced damage through stabilizing mitochondrial membrane potential and enhancing the mitochondrial complex I, II or III activity and ATP level. The data demonstrated that CHS2 could have potential prospect to become an antidiabetic drug for type 2 diabetes mellitus treatment.