Compound K (CK) is a final intestinal metabolite of protopanaxadiol-type ginsenosides (PDG) from Panax ginseng. Although anti-diabetic activity of CK have been reported with genetic mouse models ( db/db mice) in recent years, the therapeutic usefulness of CK and PDG in type 2 diabetes, a more prevalent form of diabetes, remains unclear. In the present investigation, we developed a mouse of non-insulin-dependent diabetes mellitus that closely simulated the metabolic abnormalities of the human disease. For this purpose, type 2 diabetes was induced in male ICR mice by combining of streptozotocin. The male ICR mice fed with HFD for 4 weeks received 100 mg/kg of STZ injected intraperitoneally. After 4 weeks, mice with fasting (12 h) blood glucose levels (FBG) above 7.8 mmol/L were divided into 3 groups ( n = 12) and treated with vehicle (diabetes model, DM), 300 mg/kg/day of PDG and 30 mg/kg/day of CK for 4 weeks while continuing on the high-fat diet. Hypoglycemic effects of CK and PDG were consistently demonstrated by FBG levels, and insulin-sensitizing effects were seen during oral glucose tolerance testing (OGTT). Moreover, the mechanism of hypoglycemic effect in type 2 diabetic mice was examined. Gluconeogenic genes, Phosphoenolpyruvate carboxykinase (PEPCK) and Glucose-6-phosphatase (G6Pase), were decreased in two treatment groups with CK showing greater effects. These findings demonstrated the hypoglycemic and insulin-sensitizing capabilities of CK on type 2 diabetes induced by HFD/STZ via down-regulation of PEPCK and G6Pase expression in liver.