Hon-Chi was used for anti-hyperglycemic activity screening in streptozotocin-induced diabetic rats (STZ-diabetic rats) in an attempt to develop new substances for handling diabetes. Mandarin Hon-Chi is red yeast rice fermented with Monascus pilous and Monascus purpureus. Single oral administration of Hon-Chi decreased plasma glucose in STZ-diabetic rats in a dose-dependent manner from 50 mg/kg to 350 mg/kg. Similar treatment with Hon-Chi also lowered the plasma glucose in normal rats as effectively as that produced in STZ-diabetic rats. In addition, oral administration of Hon-Chi at the highest dose (350 mg/kg) attenuated the elevation of plasma glucose induced by an intravenous glucose challenge test in normal rats. Moreover, mRNA levels of phosphoenolpyruvate carboxykinase (PEPCK) in liver from STZ-diabetic rats were reversed in a dose-dependent manner by the repeated oral treatment of Hon-Chi three times daily for two weeks. Otherwise, hyperphagia in STZ-diabetic rats was markedly reversed by similar repeated treatment of Hon-Chi. The obtained results suggest that oral administration of Hon-Chi could decrease hepatic gluconeogenesis to lower plasma glucose in diabetic rats lacking insulin.