Bitter gourd (BG, Momordica charantia) exerts proven blood glucose- and body weight-lowering effects. To develop an effective and safe application, it is necessary to identify the bioactive compounds and biochemical mechanisms responsible for these effects in type 2 diabetes. A total of forty-five 4-week-old male db/db mice were assigned to five groups of nine each. The mice were given sterile tap water as a control, a whole fruit powder, the lipid fraction, the saponin fraction or the hydrophilic residue of BG at a daily oral dosage of 150 mg/kg body weight for 5 weeks, respectively. Weight gain was significantly decreased in all the BG-treated groups (P ≤ 0·05). Glycated Hb levels were the highest in the control mice compared with all the four BG-treated mice (P = 0·02). The lipid fraction had the strongest effect, and it tended (P = 0·075) to reduce glycated Hb levels from 9·3 % (control mice) to 8·0 % (lipid fraction-treated mice). The lipid and saponin fractions reduced lipid peroxidation of adipose tissue significantly (P ≤ 0·01). Additionally, the saponin fraction and the lipid fraction reduced protein tyrosine phosphatase 1B (PTP 1B) activity in skeletal muscle cytosol by 25 % (P = 0·05) and 23 % (P = 0·07), respectively. PTP 1B is the physiological antagonist of the insulin signalling pathway. Inhibition of PTP 1B increases insulin sensitivity. This is the first study to demonstrate that BG is involved in PTP 1B regulation, and thus explains one possible biochemical mechanism underlying the antidiabetic effects of BG in insulin resistance and type 2 diabetes.