To investigate the protective effects of modified Linggui Zhugan Decoction (, MLZD), a traditional Chinese medicine formula, on obese type 2 diabetes mellitus (T2DM) rats. Fifty Sprague-Dawley rats were randomly divided into 5 groups by a random number table, including normal, obese T2DM (ob-T2DM), MLZD low-dose [MLDZ-L, 4.625 g/(kg·d)], MLZD middle-dose [MLD-M, 9.25 g/(kg·d) ] and MLZD high-dose [MLD-H, 18.5 g/(kg·d)] groups, 10 rats in each group. After 4-week intervention, blood samples and liver, pancreas, muscle tissues were collected to assess the insulin resistance (IR), blood lipid, adipokines and inflammation cytokines. The alteration of phosphatidylinositol 3 kinase (PI3K)-protein kinase B (PKB or Akt)/the mammalian target of rapamycin (mTOR)-ribosome protein subunit 6 kinase 1 (S6K1 )/AMP-activated protein kinase (AMPK)-peroxisome proliferator-activated receptor gamma coactivator 1 alpha (PGC-1 α) pathways were also studied. MLZD dose-dependently reduced fasting blood glucose, fasting insulin, homeostasis model of assessment for IR index and increased insulin sensitive index compared with ob-T2DM rats (P<0.05). Similarly, total cholesterol, triglyceride, low-density lipoprotein cholesterol and free fatty acids were also decreased compared with ob-T2DM rats after 4-week treatment (P<0.05 or P<0.01). Improvements in adipokines and inflammatory cytokines were observed with a raised level of adiponectin and a reduced level of leptin, resistin, tumor necrosis factor-α and interleukin-6 (P<0.05 or P<0.01). MLZD regulated the PI3K-Akt/mTOR-S6K1/AMPK-PGC-1 α pathways and restored the tissue structure of liver and pancreas (P<0.05 or P<0.01). MLZD ameliorated glycolipid metabolism and inflammation, which may be attributed to the regulation of PI3K-Akt/mTOR-S6K1/AMPK-PGC-1 α pathways.