Syzygium cumini (SC) is well known for its anti-diabetic potential, but the mechanism underlying its amelioration of type 2 diabetes is still elusive. Therefore, for the first time, we investigated whether SC aqueous seed extract (100, 200, or 400 mg/kg) exerts any beneficial effects on insulin resistance (IR), serum lipid profile, antioxidant status, and/or pancreatic β-cell damage in high-fat diet / streptozotocin–induced (HFD–STZ) diabetic rats. Wistar albino rats were fed with HFD (55% of calories as fat) during the experiment to induce IR and on the 10th day were injected with STZ (40 mg/kg, i.p.) to develop type 2 diabetes. Subsequently, after confirmation of hyperglycemia on the 14th day (fasting glucose level > 13.89 mM), diabetic rats were treated with SC for the next 21 days. Diabetic rats showed increased serum glucose, insulin, IR, TNF-α, dyslipidemia, and pancreatic thiobarbituric acid-reactive substances with a concomitant decrease in β-cell function and pancreatic superoxide dismutase, catalase, and glutathione peroxidase antioxidant enzyme activities. Microscopic examination of their pancreas revealed pathological changes in islets and β-cells. These alterations reverted to near-normal levels after treatment with SC at 400 mg/kg. Moreover, hepatic tissue demonstrated increased PPARγ and PPARα protein expressions. Thus, our study demonstrated the beneficial effect of SC seed extract on IR and β-cell dysfunction in HFD–STZ-induced type 2 diabetic rats.