Novel functional polysaccharides from fungi are important nutraceuticals. An exopolysaccharide, Morchella esculenta exopolysaccharide (MEP 2), was extracted and purified from the fermentation liquor of M. esculenta. The aim of this study was to investigate its digestion profile, antioxidant capacity, and effect on the microbiota composition in diabetic mice. The study found that MEP 2 was stable during in vitro saliva digestion but was partially degraded during gastric digestion. The digest enzymes exerted a negligible effect on the chemical structure of MEP 2. Molecular weight and atomic force microscope (AFM) images suggest that both smaller chains and larger aggregations were produced. Scanning electron microscope (SEM) images reveal that the surface morphology was much altered after intestinal digestion. After digestion, the antioxidant ability increased as revealed by the 2,2-diphenyl-1-picrylhydrazyl (DPPH) and 2,2'-azino-bis (3-ethylbenzothiazoline-6-sulfonic acid) (ABTS) assays. Both MEP 2 and its digested components showed strong α-amylase and moderate α-glucosidase inhibition activity, leading us to further investigate its ability to modulate the diabetic symptoms. The MEP 2 treatment ameliorated the inflammatory cell infiltration and increased the size of pancreas inlets. Serum concentration of HbA1c was significantly reduced. Blood glucose level during the oral glucose tolerance test (OGTT) was also slightly lower. The MEP 2 increased the diversity of the gut microbiota and modulated the abundance of several important bacteria including Alcaligenaceae, Caulobacteraceae, Prevotella, Brevundimonas, Demequina, and several Lachnospiraceae species. It was found that MEP 2 was partially degraded during in vitro digestion. Its potential antidiabetic bioactivity may be associated with its α-amylase inhibition and gut microbiome modulation ability. © 2023 Society of Chemical Industry.