<b><i>Objective:</i></b> Prolonged diabetes mellitus causes impairments of cognition and attentional dysfunctions. Diosgenin belongs to a group of steroidal saponins with reported anti-diabetic and numerous protective properties. This research aimed to assess the effect of diosgenin on beneficially ameliorating learning and memory decline in a rat model of type 1 diabetes caused by streptozotocin (STZ) and to explore its modes of action including involvement in oxidative stress and inflammation.<i></i><b><i>Methods:</i></b><i></i>Rats were assigned to one of four experimental groups, comprising control, control under treatment with diosgenin, diabetic, and diabetic under treatment with diosgenin. Diosgenin was given daily p.o. (40 mg/kg) for 5 weeks. <b><i>Results:</i></b> The administration of diosgenin to the diabetic group reduced the deficits of functional performance in behavioral tests, consisting of Y-maze, passive avoidance, radial arm maze, and novel object discrimination tasks (recognitive). Furthermore, diosgenin treatment attenuated hippocampal acetylcholinesterase activity and malondialdehyde, along with improvement of antioxidants such as superoxide dismutase and glutathione. Meanwhile, the hippocampal levels of inflammatory indicators, namely interleukin 6, nuclear factor-κB, toll-like receptor 4, tumor necrosis factor α, and astrocyte-specific biomarker glial fibrillary acidic protein, were lower and, on the other hand, tissue levels of nuclear factor (erythroid-derived 2)-related factor 2 were elevated upon diosgenin administration. Besides, the mushroom-like spines of the pyramidal neurons of the hippocampal CA1 area decreased in the diabetic group, and this was alleviated following diosgenin medication. <b><i>Conclusions:</i></b> Taken together, diosgenin is capable of ameliorating cognitive deficits in STZ-diabetic animals, partly due to its amelioration of oxidative stress, inflammation, astrogliosis, and possibly improvement of cholinergic function in addition to its neuroprotective potential.