Diabetes mellitus (DM) is a chronic metabolic condition, characterized by hyperglycaemia, oxidative imbalance, pancreatic β-cell death, and insulin insufficiency. Angiotensin II (Ang II) increases oxidative stress, inflammation, and apoptosis, and Ang II type 1 receptor (AT1R) blockers (ARBs) can ameliorate inflammatory response and oxidative stress. However, like other small-molecule drugs, free ARBs show poor in vivo efficacy and dose-limiting toxicities. Hence, in this study, we developed nano-formulations of telmisartan (TEL), an ARB, by encapsulating it inside a murine insulinoma cell-derived extracellular vesicle (nanoTEL) and a bio-mimetic lipid nanovesicle (lipoTEL). Both nano-formulations showed spherical morphology and sustained release of TEL. In vitro, nanoTEL restored oxidative equilibrium, attenuated reactive oxygen species levels, enhanced the uptake of glucose analogue, and increased the expression of glucose transporter protein 4 better than lipoTEL. In a streptozotocin-induced murine model of diabetes, nanoTEL lowered blood glucose levels, improved glucose tolerance, and promoted insulin synthesis and secretion significantly better than lipoTEL. Moreover, nanoTEL was found superior in ameliorating the pancreatic inflammatory microenvironment by regulating NF-κBp65, HIF-1α, and PPAR-γ expression; modulating IL-1β, IL-6, tumor necrosis factor-α, IL-10, and IL-4 levels and inducing the polarization of macrophage from M1 to M2. Further, nanoTEL administration induced angiogenesis and promoted the proliferation of pancreatic cells to restore the structural integrity of the islets of Langerhans more efficiently than lipoTEL. These findings collectively suggest that nanoTEL outperforms lipoTEL in restoring the function of pancreatic β-cells by modulating the pancreatic inflammatory microenvironment and show potential for the treatment of DM.