Controlling hyperglycemia and dyslipidemia is associated with reduced risks for diabetic complications. The present study examined the effect of dongchunghacho (Cordyceps militaris; CM) on hyperglycemia and dyslipidemia in an animal model of type 2 diabetes. Five-week-old db/db mice were fed an AIN-93G diet or a diet containing 1% CM water extract, whereas db/+ mice were offered the AIN-93G diet for 6 weeks. Consumption of CM significantly decreased blood glycated hemoglobin and serum glucose levels, as well as homeostasis model assessment for insulin resistance (HOMA-IR), in db/db mice. CM significantly lowered serum triglyceride and total cholesterol levels, and increased HDL-cholesterol level. CM water extract inhibited rat intestinal ${alpha}$-glucosidase, with an $IC_{50}$ of 182 ${mu}g/mL$ in vitro. These results indicate that CM exerted hypoglycemic and hypolipidemic effects in db/db mice.