This study aims to assess the effect of different doses of Chinese yam (CY) on a high‐fat diet (HFD) and a streptozotocin‐induced diabetic rat model, using resistant starch (RS) as a positive control. Rats in the normal control and diabetes model (DM) groups are fed the standard diet and HFD, respectively. The RS and CY‐intervention groups are fed with a special HFD, in which starch, maltodextrin, and sucrose in the HFD are replaced completely with RS or CY powder in different proportions: 33.33% (1/3), 66.67% (2/3), and 100% respectively. The results show that CY powder can decrease serum levels of total triglycerides, total cholesterol, low‐density lipoprotein cholesterol, fasting blood glucose, and glycated hemoglobin, lower abdominal fat weight and abdominal fat index, increase levels of insulin and hepatic glycogen, and improve glucose tolerance and insulin sensitivity in diabetic rats. In addition, CY reduces oxidative stress and inflammation and reduces spleen weight and spleen index in diabetic rats. Notably, CY shows higher efficacy than RS in glucose tolerance and serum insulin and nitric oxide levels. This study suggests that CY powder may replace RS as a functional food in diabetic diets.