Artificial pancreas system (APS) is an emerging new treatment for type 1 diabetes mellitus. The aim of this study was to develop a rat APS as a research tool and demonstrate its application. We established a rat APS using Medtronic Minimed Pump 722, Medtronic Enlite sensor, and the open artificial pancreas system as a controller. We tested different dilutions of Humalog (100 units/ml) in saline ranged from 1:3 to 1:20 and determined that 1:7 dilution works well for rats with ~500g bodyweight. Blood glucose levels (BGL) of diabetic rats fed with chow diet (58% carbohydrate) whose BGL was managed by the closed-loop APS for the total duration of 207h were in euglycemic range (70–180 mg/dl) for 94.5% of the time with 2.1% and 3.4% for hyperglycemia (>180mg/dl) and hypoglycemia (<70 mg/dl), respectively. Diabetic rats fed with Sucrose pellets (94.8% carbohydrate) for the experimental duration of 175h were in euglycemic range for 61% of the time with 35% and 4% for hyperglycemia and hypoglycemia, respectively. Heathy rats fed with chow diet showed almost a straight line of BGL ~ 95 mg/dl (average 94.8 mg/dl) during the entire experimental period (281h), which was minimally altered by food intake. In the healthy rats, feeding sucrose pellets caused greater range of BGL in high and low levels but still within euglycemic range (99.9%). Next, to study how healthy and diabetic rats handle supra-physiological concentrations of glucose, we intraperitoneally injected various amounts of 50% dextrose (2, 3, 4g/kg) and monitored BGL. Duration of hyperglycemia after injection of 50% dextrose at all three different concentrations was significantly greater for healthy rats than diabetic rats, suggesting that insulin infusion by APS was superior in reducing BGL as compared to natural insulin released from pancreatic β-cells. Ex vivo studies showed that islets isolated from diabetic rats were almost completely devoid of pancreatic β-cells but with intact α-cells as expected. Lipid droplet deposition in the liver of diabetic rats was significantly lower with higher levels of triacylglyceride in the blood as compared to those of healthy rats, suggesting lipid metabolism was altered in diabetic rats. However, glycogen storage in the liver determined by Periodic acid-Schiff staining was not altered in diabetic rats as compared to healthy rats. A rat APS may be used as a powerful tool not only to study alterations of glucose and insulin homeostasis in real-time caused by diet, exercise, hormones, or antidiabetic agents, but also to test mathematical and engineering models of blood glucose prediction or new algorithms for closed-loop APS.