The liver is the primary organ regulating glucose metabolism. In our recent study, cinnamon improved liver function in diabetic mice. However, it is not clear whether cinnamon can reduce the glycemia of diabetic animals by regulating liver glucose metabolism. The purpose of this study was to investigate the hypoglycemic mechanism of cinnamon powder (CP) from the perspective of regulating liver glucose metabolism. To achieve this, different doses of CP (200, 400, or 800 mg/kg body weight) were given to diabetic mice by gavage once per day for 8 weeks. These mice were compared with healthy controls, untreated diabetic mice, and diabetic mice treated with metformin (the main first-line drug for type 2 diabetes). CP treatment effectively reduced fasting blood glucose levels and food intake, improved glucose tolerance and fasting serum insulin levels, and decreased glycated serum protein levels in diabetic mice. Furthermore, treatment with CP increased liver glycogen content and reduced the level of the gluconeogenesis precursor pyruvate in the liver. Data obtained by qPCR and western blotting suggested that CP improved glucose metabolism disorders by regulating AMPKα/PGC1α-mediated hepatic gluconeogenesis and PI3K/AKT-mediated hepatic glycogen synthesis. CP exhibits good hypoglycemic effects by improving hepatic glycogen synthesis and controlling hepatic gluconeogenesis. Therefore, CP may be applied as a functional food to decrease blood glucose.