Background: Diabetes mellitus is a life-threatening disease associated with worsening of glycemic control, progressive metabolic dysfunctions and disruption of the Phosphatase and Tensin Homolog (PTEN) receptor. Purpose: To evaluate the effect of chloroquine on blood glucose level and lipid profile of alloxan-induced diabetic mice and to observe its interaction with PTEN, a negative regulator of insulin signaling pathway. Methodology: Thirty mice were used for the experiment. A group (n = 5) was kept as healthy control while the others were pre-treated with 140 mg/kg of alloxan monohydrate in distilled water. The alloxan-induced diabetic mice were randomly divided into four groups: diabetic model control group, 60 mg/kg chloroquine, 120 mg/kg chloroquine, and 10 mg/kg glibenclamide treatment groups respectively. Treatment was done once daily for seven days and the blood glucose level was investigated acutely and then daily throughout the experimental period. A molecular docking study was also conducted to evaluate the interaction of chloroquine with PTEN using PYRX software, while an automated COBAS C 311 machine was used to analyze the lipid profile after the treatment period. Results: Oral administration of chloroquine gradually and significantly lowered the raised blood glucose level in a time- and dose-dependent manner. A repeated study with 120 mg/kg of chloroquine revealed a decline in blood sugar from 221.5 ± 3.6 on day 1 to 85.5 ± 2.4 on day 7 in comparison to glibenclamide, whose sugar level was reduced to 75.5 ± 3.7 at the end of day 7. The docking study revealed a non-competitive inhibition with an inhibition score of -6.1 in comparison to metformin, which had a score of -4.4, and glibenclamide, which had a score of -9.0. This interaction resulted in a conformational change of the receptor, hence, enhancing glucose uptake and reducing the raised hyperglycemia. Treatment with chloroquine was also observed to reduce the total cholesterol and triglyceride levels from 162 in the model group to 144 and 141 to 116 mmol/L, respectively. The levels of low-density lipoprotein cholesterol (LDL-C) and very low-density lipoprotein (VLDL) following treatment with chloroquine were not statistically different from the non-diabetic healthy mice. These values were very similar to those obtained with glibenclamide-treated diabetic mice. Conclusion: From the results, chloroquine possesses potent antidiabetic properties and can improve dyslipidemia imposed by hyperglycemia probably owing to its inhibition of PTEN, a negative regulator of insulin resistance.