The mechanism of the previously reported antidiabetic effect of Basella alba is unknown. This study investigated the role of B. alba aqueous leaf extract in the modulation of inflammatory cytokines and islet morphology in streptozotocin-induced diabetic rats. Forty male Wistar rats, between 8 and 10 weeks old, were randomly divided into four groups (n = 10) and administered the following treatments: Healthy control (H-c) and Diabetic control (D-c) animals received normal saline 0.5 mL/100 g body weight daily, while Healthy Treatment (H-Ba) and Diabetic Treatment (D-Ba) rats received the plant extract 200 mg/kg body weight daily. All treatments were administered by oral gavage. Diabetes was induced in D-c and D-Ba rats by a single intraperitoneal injection of streptozotocin (55 mg/kg body). The body weight and fasting blood sugar (FBS) levels were recorded every week for 4 weeks, after which the rats were euthanized and samples collected for further analysis. After the experiment, FBS level was significantly reduced (p < 0.0001) in rats in the D-Ba group, but increased (p < 0.001) in rats in the D-c group. The absolute (H-c and H-Ba vs D-c, p < 0.05) and relative (D-Ba vs H-c, p < 0.05; D-Ba vs H-Ba, p < 0.005) weights of the pancreases were significantly higher after the experiment. The rats in the D-c group had significantly higher levels of serum interleukin-1β (p < 0.001 vs H-c; p < 0.05 vs H-Ba and D-Ba) and monocyte chemotactic protein-1 (p < 0.0001), but lower levels of interleukin-10 (p < 0.05) in comparison with the other groups. Histopathological examination revealed severe interstitial congestion, reduced islet area (p < 0.0001), and increased islet cell density in the D-c group compared with those in the D-Ba group. From these findings, it was concluded that the aqueous extract of B. alba stimulates the recovery of beta-islet morphology in streptozotocin-induced diabetic rats by modulating the peripheral production of inflammatory cytokines.