Type 2 diabetes mellitus (T2DM) is associated with an oxidative milieu that often leads to adverse health problems. Bioactive peptides of zein possess outstanding antioxidant activity; however, their effects on hyperglycemia-related oxidative stress remain elusive. In the present study, the dipeptide Tyr-Ala (YA), a functional peptide with typical health benefits, was applied to alleviate oxidative stress in pancreatic islets under hyperglycemic conditions. By detecting viability, antioxidant ability, and insulin secretion in INS-1 cells, YA showed excellent protection of INS-1 cells from H2O2 oxidative stress, erasing reactive oxygen species (ROS) and promoting insulin secretion. Moreover, by Western blotting, we found that YA can regulate the PI3K/Akt signaling pathway associated with glycometabolism. After establishing a T2DM mice model, we treated mice with YA and measured glucose, insulin, hemoglobin A1C (HbA1c), total cholesterol (TC), triglyceride (TG), and malonaldehyde (MDA) levels and activities of superoxide dismutase (SOD) and glutathione (GSH) from blood samples. We observed that YA could reduce the production of glucose, insulin, HbA1c, TC, TG, and MDA, in addition to enhancing the activities of SOD and GSH. YA could also repair the function of the kidneys and pancreas of T2DM mice. Along with the decline in fasting blood glucose, the oxidative stress in islets was alleviated in T2DM mice after YA administration. This may improve the health situation of diabetic patients in the future.