Ficus deltoidea var. deltoidea Jack (FD) is a well-known plant used in Malay folklore medicine to lower blood glucose in diabetic patients. For further research of the antihyperglycemic mechanisms, the protein tyrosine phosphatase 1B (PTP1B)-inhibitory effect of FD was analysed both in vitro and in vivo. To optimise a method for FD extraction, water, 50, 70, 80, 90 and 95 % ethanol extracts were prepared and determined for their total phenolic and triterpene contents, and PTP1B-inhibition capacity. Among the tested extracts, 70 % ethanol FD extract showed a significant PTP1B inhibition (92·0 % inhibition at 200 µg/ml) and high phenolic and triterpene contents. A bioassay-guided fractionation of the 70 % ethanol extract led to the isolation of a new triterpene (3β,11β-dihydroxyolean-12-en-23-oic acid; F3) along with six known compounds. In vivo, 4 weeks' administration of 70 % ethanol FD extract (125, 250 and 500 mg/kg/d) to streptozotocin-nicotinamide-induced type 2 diabetic rats reversed the abnormal changes of blood glucose, insulin, total Hb, GLUT2, lipid profile, and oxidative stress in liver and pancreas. Moreover, FD reduced the mRNA expression of the key gluconeogenic enzymes (phosphoenolpyruvate carboxykinase and glucose 6-phosphatase) and restored insulin receptor and GLUT2 encoding gene (Slc2a2) expression. In addition, FD significantly down-regulated the hepatic PTP1B gene expression. These results revealed that FD could potentially improve insulin sensitivity, suppress hepatic glucose output and enhance glucose uptake in type 2 diabetes mellitus through down-regulation of PTP1B. Together, our findings give scientific evidence for the traditional use of FD as an antidiabetic agent.