Type 2 diabetes mellitus (T2DM), a metabolic disease that poses a serious threat to human health, is characterized by sustained hyperglycemia due to dysregulated insulin secretion. Rhodiola heterodonta (R. heterodonta) is an edible plant, and its root is a popular herbal tea for lowering blood sugar in Tajikistan's folk remedy. However, R. heterodonta has not received much attention outside of the former Soviet Union. Furthermore, the hypoglycemic components of R. heterodonta and their underlying mechanisms are poorly understood. In this study, we extracted R. heterodonta roots and obtained R. heterodonta root extract (RHRE) through preliminary purification. RHRE significantly inhibited the activities of α-glucosidase (α-GAA) and protein tyrosine phosphatase 1B (PTP1B), thus highlighting its powerful hypoglycemic effect. Twenty-six compounds were identified in RHRE by LC-MS/MS analysis, with flavonoids and phenolic acids existing as the predominant components. Network pharmacology further predicted that the PI3K/AKT pathway is crucial for the anti-T2DM effects of RHRE, and molecular docking suggested the significant binding affinities between the key components of RHRE and PTP1B. Importantly, RHRE exerted its hypoglycemic effect by modulating the PTP1B/PI3K/AKT/GSK3β pathway in insulin-resistance L6 and L02 cells. Additionally, RHRE exhibited antioxidant activity and potent DPPH and ABTS radical scavenging abilities. Ferroptosis, an emerging modality of cell death driven by ROS-induced lipid peroxidation, is considerably linked to the progression of T2DM. RHRE alleviated oxidative stress and inhibited ferroptosis through the activation of the Nrf2/HO-1/SLC7A11/GPX4 axis and the downregulation of ACSL4 expression. In conclusion, our study indicates that RHRE is a potential source of antioxidant and hypoglycemic bioactive compounds and can be used for the development of health products and functional foods for the prevention of T2DM.