Isosteviol (ISV), a diterpene molecule, is an isomer of the backbone structure of a group of substances with recently proven antidiabetic capabilities in both man and rodents. The aim of this study was to investigate if ISV possesses beneficial effects on the metabolism in the diabetic KKAy mouse and to establish the long-term in vivo effects of ISV on the gene expression profile of key insulin regulatory genes in islets. Twenty KKAy mice, aged 5 weeks, were divided into two groups and treated for 9 weeks with either (i) standard chow diet (control) or (ii) chow + 20 mg/kg body weight of ISV. Blood samples were collected before and after intervention and were subsequently analysed. As a non-diabetic control group, 10 normal C57BL mice were fed with standard chow diet. Gene expression was determined in islets by quantitative real-time RT-PCR and Affymetrix microarray. We demonstrated that long-term treatment with ISV improves glucose homeostasis, increases insulin sensitivity, lowers plasma triglycerides and lowers weight in the diabetic KKAy mice. Furthermore, ISV markedly changes the gene expression profile of key insulin regulatory genes GLUT2, Ins1, Ins2, Pdx1/Ipf1, Beta2/Neurod1, Pax6 and 11-beta-HSD-1 and beta-cell transcription factors Nkx2-2, Nkx6-1, C/EBPalpha and FoxA2 in isolated islets of the KKAy mice. The results indicate that ISV improves glucose and insulin sensitivity as well as improving the lipid profile and upregulates the gene expression of key beta-cell genes, including insulin regulatory transcription factors.