This study investigated the blood glucose-lowering effect and antioxidant capacity of caffeic acid in C57BL/KsJ-db/db mice. Caffeic acid induced a significant reduction of the blood glucose and glycosylated hemoglobin levels than the control group. The plasma insulin, C-peptide, and leptin levels in caffeic acid group were significantly higher than those of the control group, whereas the plasma glucagon level was lower. Increased plasma insulin by caffeic acid was attributable to an antidegenerative effect on the islets. Caffeic acid also markedly increased glucokinase activity and its mRNA expression and glycogen content and simultaneously lowered glucose-6-phosphatase and phosphoenolpyruvate carboxykinase activities and their respective mRNA expressions, accompanied by a reduction in the glucose transporter 2 expression in the liver. In contrast to the hepatic glucose transporter 2, adipocyte glucose transporter 4 expression was greater than the control group. In addition, caffeic acid significantly increased superoxide dismutase, catalase, and glutathione peroxidase activities and their respective mRNA levels, while lowering the hydrogen peroxide and thiobarbituric acid reactive substances levels in the erythrocyte and liver of db/db mice. These results indicate that caffeic acid exhibits a significant potential as an antidiabetic agent by suppressing a progression of type 2 diabetic states that is suggested by an attenuation of hepatic glucose output and enhancement of adipocyte glucose uptake, insulin secretion, and antioxidant capacity.