In search for an effective oral treatment for diabetes, we examined the capacity of glucose tolerance factor (GTF) extracted from yeast and administered orally to reduce hyperglycaemia in rat models exhibiting insulin deficiency. The cellular effect of GTF on the insulin signalling pathway was investigated in vitro. GTF (oral bolus), insulin (intraperitoneal) or their combination was administered to streptozotocin-diabetic (STZ) or hyperglycaemic Cohen diabetic-sensitive (hyp-CDs) rats. Blood glucose (BG) and insulin levels were measured in the postprandial (PP) state and during an oral glucose tolerance test. Deoxy-glucose transport and insulin signal transduction were assessed in 3T3-L1 adipocytes and myoblasts incubated with the GTF. Low dose of insulin produced a 34 and 12·5 % reduction in the PP-BG levels of hyp-CDs and STZ rats, respectively. GTF induced a 33 and 17 % reduction in the PP-BG levels of hyp-CDs and STZ rats, respectively. When combined with insulin, a respective decrease (58 and 42 %) in BG levels was observed, suggesting a partially additive (hyp-CDs) or synergistic (STZ rats) effect of the GTF and insulin. GTF did not induce insulin secretion in hyp-CDs rats, yet it lowered their BG levels, proposing an effect on glucose clearance by peripheral tissues. GTF induced a dose-dependent increase in deoxy-glucose transport into myoblasts and fat cells similar to insulin, while the combined treatment resulted in augmented transport rate. GTF induced a dose- and time-dependent phosphorylation of insulin receptor substrate 1, Akt and mitogen-activated protein kinase independent of insulin receptor phosphorylation. GTF exerts remarkable insulin-mimetic and insulin-potentiating effects, both in vivo and in vitro. It produces an insulin-like effect by acting on cellular signals downstream of the insulin receptor. These results demonstrate a potential source for a novel oral medication for diabetes.