Chronic hyperglycemia increases the risk of liver damage. Oxidative stress and aberrant inflammatory response are entangled in diabetes-associated liver injury. This study evaluated the protective effect of the flavonoid galangin (Gal) on glucose intolerance, liver injury, oxidative stress, inflammatory response, and Nrf2/HO-1 signaling in diabetic rats. Diabetes was induced by streptozotocin (STZ), and the rats received Gal for six weeks. STZ-induced rats showed glucose intolerance, hypoinsulinemia, elevated glycated hemoglobin (HbA1c), and decreased liver glycogen. Gal ameliorated glucose intolerance, reduced HbA1c%, increased serum insulin and liver glycogen and hexokinase activity, and suppressed glycogen phosphorylase, glucose-6-phosphatase and fructose-1,6-biphosphatase in diabetic rats. Circulating transaminases, ALP and LDH, and liver ROS, MDA, TNF-α, IL-1β, and IL-6 were increased and GSH, SOD, and CAT were diminished in diabetic rats. In addition, diabetic rats exhibited multiple histopathological alterations and marked collagen deposition. Treatment with Gal mitigated liver injury, prevented histopathological alterations, decreased ROS, MDA, pro-inflammatory cytokines, Bax and caspase-3, and enhanced cellular antioxidants and Bcl-2. Gal downregulated hepatic Keap1 in diabetic rats and upregulated Nrf2 and HO-1 mRNA as well as HO-1 activity. Molecular modeling studies revealed the ability of Gal to bind to and inhibit NF-κB and Keap1, and also showed its binding pattern with HO-1. In conclusion, Gal ameliorates hyperglycemia, glucose intolerance, oxidative stress, inflammation, and apoptosis in diabetic rats. Gal improved carbohydrate metabolizing enzymes and upregulated Nrf2/HO-1 signaling.