The current investigation attempted to confirm the beneficial actions of a chemically characterized Radix Astragali decoction (AM-W) against type 2 diabetic (T2D) Sprague-Dawley (SD) rats. Using a case/control design, after 2 months of treatment with AM-W (500 mg/kg, daily i.p.) in T2D rats therapeutic outcomes were compared. Sucrose and Astragalus polysaccharides (ASPs) were shown to exist in nearly equal proportions in AM-W. Body weight loss, an improvement in insulin sensitivity, and an attenuation of fatty liver after AM-W administration in T2D rats were evident. Surprisingly, blood sugar, beta-cell function, and glucose tolerance in T2D rats did not improve with AM-W treatment. Further investigation indicated the deleterious effects of the addition of sucrose (100 and 500 μg/mL) and APSs (500 μg/mL) on glucose-stimulated insulin secretion and viability, respectively. In conclusion, a proper administration dosage and a reduction in the sucrose content are keys to maximizing the merits of this herb.