Lespedeza has been used for the management of diabetes in folklore medicine. The purpose of this study is to investigate the protective effects of the methanol extract of Lespedeza davurica (LD) on cytokine-induced β-cell damage and streptozotocin- (STZ-) induced diabetes. RINm5F cells were treated with interleukin- (IL-) 1β and interferon- (IFN-) γ to induce pancreatic β-cell damage. The exposure of LD extract significantly decreased cell death, nitric oxide (NO) production, nitric oxide synthase (iNOS) expression, and nucleus factor-kappa B (NF-κB) p65 activation. Antidiabetic effects of LD extract were observed by oral glucose tolerance test (OGTT) in normal rats and by checking the biochemical, physiological, and histopathological parameters in STZ-induced diabetic rats. In OGTT, glucose clearance levels improved by oral treatment of LD extract. The water intake, urine volume, blood glucose, and serum TG, TC, TBARS, and DPP-IV levels were significantly decreased, and liver glycogen content was significantly increased by treatment of LD extract (250 mg/kg BW) in STZ-induced diabetic rats. Also, insulin immunoreactivity of the pancreases was increased in LD extract administrated rats compared with diabetic control rats. These results indicate that LD extract may protect pancreatic β-cell damage and regulate the blood glucose in STZ-induced diabetic rats.