The effects of fermented chaga mushroom (Inonotus obliquus) on the concentrations of serum glucose, insulin, lipids and lipid peroxidation in streptozotocin (STZ)-induced diabetic rats were investigated. Rats were fed a semisynthetic diet supplemented with 50 g/kg chaga mushroom powder (the CM group) and fermented chaga mushroom powder (the FCM group), and no supplemented (the control group) for 3 weeks. The polysaccharide concentrations were CM by $42.9\%$ and FCM by $ 39.1\%$, and the total polyphenol concentrations were CM by $ 0.80\%$ and FCM by $0.91\%$. Feed intakes and water consumption, serum glucose, insulin, triglyceride, and blood urea nitrogen concentrations were significantly lower in the FCM group than in both the CM and control groups. The activities of AST and ALT were also significantly lower in the FCM group than in the control group. No significant differences were detected with regard to the serum cholesterol and creatinine concentrations among the experimental groups. Lipid peroxidations in hepatic homogenate, microsomal and mitochondrial subcellular and pancreas were significantly lowered by the administration of FCM in the STZ-diabetic rats. Hepatic glutathione concentrations, which is closely associated with antioxidant system, was significantly higher in the FCM group than in the control group, indicating a marked effect of FCM administration on the endogenous antioxidant system. However, CM treatment showed a moderate antioxidative activity in the STZ-diabetic rats. Our results indicate that fermented chaga mushroom exert hypoglycemic and antioxidative effects in type 1 diabetes mellitus.