Electroacupuncture (EA) is considered to have potential antidiabetic effects; however, the role of the pancreatic intrinsic nervous system (PINS) in EA-induced amelioration of type 2 diabetes (T2DM) remains unclear. Therefore, we investigated whether EA at ST25 exerts any beneficial effects on insulin resistance (IR), inflammation severity, and pancreatic β cell function via the PINS in a rat model of a high-fat diet-streptozotocin (HFD/STZ)-induced diabetes. To this end, Sprague Dawley rats were fed with HFD to induce IR, followed by STZ (35 mg/kg, i.p.) injection to establish the T2DM model. After hyperglycemia was confirmed as fasting glucose level > 16.7 mmol/L, the rats were treated with EA (2 mA, 2/15 Hz) for the next 28 days. Model rats showed increased serum glucose, insulin, IR, and TNF-α levels with a concomitant decrease in β cell function. Microscopy examination of the pancreas revealed pathological changes in islets, which reverted to near-normal levels after EA at ST25. EA improved islet cell morphology by increasing islet area and reducing vacuolation. EA at ST25 decreased transient receptor potential vanilloid 1 (TRPV1) and increased substance P (SP) and calcitonin gene-related peptide (CGRP) expression. Subsequently, insulin secretion decreased and impaired pancreatic endocrine function was restored through the TRPV1 channel (SP/CGRP)-insulin circuit. EA increased choline acetyltransferase and neuropeptide Y expression and controlled inflammation. It also enhanced the cocaine and amphetamine-regulated transcript prepropeptide expression and promoted glucagon-like peptide-1 secretion. Additionally, the electrophysiological activity of PINS during acupuncture (2.71 ± 1.72 Hz) was significantly increased compared to the pre-acupuncture frequency (0.32 ± 0.37 Hz, P < 0.05). Thus, our study demonstrated the beneficial effect of EA on β cell dysfunction via the PINS in rat models of HFD-STZ-induced T2DM.