Fermented red ginseng (FRG) was prepared by inoculating 0.1% Lactobacillus fermentum NUC-C1 and fermenting them at $40^{circ}C$ for 12 hours. The ginsenoside contents of FRG were increased compared with those of red ginseng (RG). Moreover, the levels of the ginsenosides Rg2, Rg3, and Rh2 in FRG increased significantly. In an oral glucose tolerance test (OGTT), blood glucose levels were lower in animals fed with RG and FRG extracts than in normal controls. In particular, FRG extracts in OGTT were superior to RG extracts. The antidiabetic effects of FRG in streptozotocin (STZ)-induced diabetic rats were investigated. Rats were divided into four groups: normal control, diabetes mellitus (DM), FRG administered at 100 mg/kg, and FRG administered at 200 mg/kg groups. FRG extracts were orally administered to each treatment group for 3 weeks, and blood glucose, insulin, and lipid levels of each group were determined. Orally administered FRG extracts significantly reduced blood glucose levels and increased plasma insulin levels in diabetic rats. Additionally, the activities of disaccharidases, including sucrase, lactase, and maltase, were decreased significantly in the FRG groups. FRG groups also had reduced triglyceride and total cholesterol levels, compared with the DM group. These results suggest that FRG may have antidiabetic effects in STZ-induced diabetic rats.