Rising concerns with the use of synthetic antidiabetic drugs have promoted a shift towards the use of natural products. This study therefore investigated the antidiabetic activity of peptide hydrolysate of Telfairia occidentalis (T. occidentalis) seed protein (PHTOSP) in streptozotocin-induced diabetic rats. Thirty-six (36) experimental animals were randomly distributed into six groups (A–F) of six rats each (n = 6). Group A served as normal control while groups B, C, D, E, and F were treated with streptozotocin (STZ, 50 mg/kg body weight, b.w, i.p) dissolved in cold citrate buffer (0.1 M, pH 4.5) to induce type 2 diabetes. Groups C, D, and E were administered 50, 100, and 150 mg/kg b.w PHTOSP, respectively, while groups B and F were diabetic untreated and 5 mg/kg b.w glibenclamide-treated controls, respectively, in the experiment that lasted for 21 days. Subsequently, the analysis of biochemical parameters demonstrated a significant (p<0.05) increase in serum insulin, hepatic glycogen, hexokinase, and glucose-6-phosphate dehydrogenase activities, accompanied by a significant (p<0.05) reduction in fasting serum glucose, glucose-6-phosphatase, and fructose-1,6-bisphosphatase, along with an enhancement in relative body weight. Similarly, PHTOSP demonstrated a significant (p<0.05) improvement on high-density (HDL) and low-density (LDL) lipoproteins, triglyceride (TG), total cholesterol (TC), and atherogenic index (AI) significantly (p<0.05). In addition, histoarchitectural analysis revealed a reversal of congestion and proliferation of inflammatory cells in the pancreatic tissue following treatment with PHTOSP. Therefore, PHTOSP might possess potential antidiabetic properties such that it improves glycolytic pathway and promotes cell survival that are helpful in the management of diabetes mellitus (DM).