Neem (Azadirachta indica) plant components are popularly applied in ethnomedicine for the management of numerous diseases. The current study aimed to assess the anti-diabetic potential and mechanism of neem seed oil (NSO) in a rodent model of type 2 diabetes mellitus induced by a chronic high-fat diet and a single low-dose of streptozotocin. Diabetic animals (blood glucose levels ≥ 220 mg/dL) were post-treated (orally) with NSO (200 and 400 mg/kg) or the standard drug, metformin (150 mg/kg), for 30 days. Two other groups served as the negative and positive controls. NSO significantly (p<0.05) reversed diabetes-induced hyperglycemia, impaired glucose tolerance, dyslipidemia, and oxido-inflammatory imbalances typified by alterations in the NADH/NAD+ ratio (p<0.001), elevations in the levels of C-reactive protein, 4-hydroxynonenal, malondialdehyde, and pro-inflammatory cytokines (TNF-α and Il-1β), and reductions in endogenous antioxidant enzymes. Furthermore, gene expression of inflammatory cytokines and glycogen synthase kinase 3 beta (GSK-3β) was upregulated in the hepatic and pancreatic tissues of NSO-treated animals. The protective effect of NSO was corroborated by the histological assessment of the pancreatic tissue. The results revealed that the anti-diabetic potential of NSO proceeded through its hypolipidemic activity and modulation of redox and inflammatory signaling events in the hepatic and pancreatic tissues.