The present study evaluated the protective effect of melatonin and insulin from LPS and diabetes-induced oxidative stress, impairment of peritoneal leukocyte functions, and inflammation in Swiss albino mice. Diabetes was induced in Swiss albino mice by streptozotocin treatment. Experimental mice were divided into two sets. Set-1 contains control, diabetic, melatonin, insulin, and melatonin+insulin groups of mice. In set-II, all groups of mice were challenged with a single dose of LPS (50mg/mice). Lipid peroxidation, antioxidant enzymes (SOD, Catalase, GPx) activity, non-enzymatic GSH level, Nrf2/HO-1 expression, phagocytic index, intracellular ROS generation, and proinflammatory cytokines were measured. Diabetic as well as LPS treated diabetic mice showed significantly increased lipid peroxidation, suppressed antioxidant defence system, and down regulated Nrf2/HO-1 expression in spleen tissues; suppressed phagocytic index and increased ROS generation in adherent peritoneal leukocytes and increased level of circulatory proinflammatory cytokines. Either treatment of melatonin or insulin significantly improved the harmful effects caused by both of LPS treatment and of diabetes in experimental mice. Simultaneous treatment of melatonin and insulin effectively ameliorated the LPS, as well as diabetes, caused oxidative load, impairment of adherent peritoneal leukocyte function, and improved the level of circulatory proinflammatory cytokines. In the present study, we have noted that combined treatment of melatonin and insulin was more effective in attenuation of diabetes and LPS induced devastating effects in laboratory mice. Therefore, the present study may suggest a combinatorial approach in the therapeutic use of melatonin and insulin to improve such devastating conditions.