Due to the surge in type 2 diabetes mellitus (T2DM), treatments for chronic metabolic dysregulations with fewer side-effects are sought. Lycii Cortex (LyC), a traditional Chinese Medicine (TCM) herb has a long history of being widely prescribed to treat T2DM as alternative medicine; however, the bioactive molecules and working mechanism remained unknown. Previous studies revealed kukoamine B (KB) as a major and featured compound for LyC with bioactivities for anti-oxidation and acute inflammation, which may be related to anti-diabetes properties. This study aims to understand the efficacy and the mode of action of KB in the diabetic (db/db) mouse model using a metabolomics approach. Parallel comparison was conducted using the first-line anti-diabetic drugs, metformin and rosligtazone, as positive controls. The db/db mice were treated with KB (50 mg kg−1 day−1) for 9 weeks. Bodyweight and fasting blood glucose were monitored every 5 and 7 days, respectively. Metabolomics and high-throughput molecular approaches, including lipidomics, targeted metabolomics (Biocrates p180), and cytokine profiling were applied to measure the alteration of serum metabolites and inflammatory biomarkers between different treatments vs. control (db/db mice treated with vehicle). After 9 weeks of treatment, KB lowered blood glucose, without the adverse effects of bodyweight gain and hepatomegaly shown after rosiglitazone treatment. Lipidomics analysis revealed that KB reduced levels of circulating triglycerides, cholesterol, phosphatidylethanolamine, and increased levels of phosphatidylcholines. KB also increased acylcarnitines, and reduced systemic inflammation (cytokine array). Pathway analysis suggested that KB may regulate nuclear transcription factors (e.g., NF-κB and/or PPAR) to reduce inflammation and facilitate a shift toward metabolic and inflammatory homeostasis. Comparison of KB with first-line drugs suggests that rosiglitazone may over-regulate lipid metabolism and anti-inflammatory responses, which may be associated with adverse side effects, while metformin had less impact on lipid and anti-inflammation profiles. Our research from holistic and systemic views supports the conclusion that KB is the bioactive compound of LyC for managing T2DM, and suggests KB as a nutraceutical or a pharmaceutical candidate for T2D treatment. In addition, our research provides insights related to metformin and rosiglitazone action, beyond lowering blood glucose.