Background. Diabetes seriously threatens the health of people. Traditional Chinese medicine has been proven to inhibit the progression of diabetes. Meanwhile, the Xiaotangzhike pill (XTZK) was known to alleviate the symptom of diabetes. Thus, this research decided to investigate the mechanism underlying the impact of XTZK in diabetes remains unexplored. Methods. To assess the impact of XTZK in diabetes, in vivo model of diabetes was constructed. The contents of total cholesterol (TC), low-density lipoprotein cholesterol (LDL-C), triglyceride (TG), and high-density lipoprotein cholesterol (HDL-C) in the rats were tested by the commercial kits. In addition, Masson and hematoxylin and eosin (H&E) staining were applied for assessing the histological changes and fibrosis in the rats, respectively. Furthermore, a western blot was applied to assess the protein levels. Results. Streptozotocin (STZ) significantly increased the levels of area under the curve (AUC), TG, TC, LDL-C, and decreased the contents of HDL-C in rats, while these phenomena were partially reversed by XTZK. In addition, STZ notably induced inflammatory infiltration and fibrosis in the liver tissues of rats, which was greatly restored by XTZK. The levels of aspartate aminotransferase (AST), alanine aminotransferase (ALT), and malondialdehyde (MDA) in the serum of rats were notably upregulated by STZ, while the effect of STZ was markedly abolished by XTZK. Meanwhile, STZ-caused the upregulation of p-Smad2 and α-SMA in rats was restored by XTZK. Furthermore, XTZK notably inhibited the progression of Qi and Yin deficiency syndrome in diabetes through the mediation of the Akt/GSK-3β axis. Conclusion. The Xiaotangzhike pill attenuates the progression of diabetes through the mediation of the Akt/GSK-3β axis. Hence, our study might supply a novel insight into discovering new strategies against diabetes.