High incidence rate of Alzheimer’s disease (AD) is observed in patients with type 2 diabetes. Aggregated β-amyloid (Aβ) and hyperphosphorylated tau are the hallmarks of AD. Hyperphosphorylated tau has been detected in diabetic animals as well as in diabetic patients. Folates mediate the transfer of one carbon unit, required in various biochemical reactions. The effect of folate on tau phosphorylation in diabetic models still remains unknown. In this study, we investigated the effect and mechanism of folic acid on hyperphosphorylation of tau in streptozotocin (STZ)-induced diabetic mice. Diabetic mice induced by STZ, at the age of 10 weeks, were administered with three levels of folic acid: folic acid-deficient diet, diet with normal folic acid content, and 120 μg/kg folic acid diet for 8 weeks. Levels of serum folate and blood glucose were monitored. Tau phosphorylation, protein phosphatase 2A (PP2A) methylation, and Glycogen synthase kinase 3β (GSK-3β) phosphorylation were detected using Western blot. The S-adenosyl methionine:S-adenosyl homocysteine ratio (SAM:SAH) in brain tissues was also determined. DNA methyltransferase (DNMT) mRNA expression levels were detected using real-time PCR. Folic acid reduced tau hyperphosphorylation at Ser396 in the brain of diabetes mellitus (DM) mice. In addition, PP2A methylation and DNMT1 mRNA expression were significantly increased in DM mice post folic acid treatment. GSK-3β phosphorylation was not regulated by folic acid administration. Folic acid can reduce tau phosphorylation by regulating PP2A methylation in diabetic mice. These results support that folic acid can serve as a multitarget neuronal therapeutic agent for treating diabetes-associated cognitive dysfunction.