Diabetic encephalopathy is one of the severe complications in patients with diabetes mellitus. Findings indicate that saffron extract has antioxidant properties but its underlying beneficial effects on diabetic encephalopathy were unclear. In the present study, the protective activities of saffron were evaluated in diabetic encephalopathy. Saffron at 40 and 80 mg/kg significantly increased body weight and serum TNF-α and decreased blood glucose levels, glycosylated serum proteins, and serum advanced glycation endproducts (AGEs) levels. Furthermore, significant increase in HDL and decrease (P<0.05) in cholesterol, triglyceride, and LDL were observed after 28 days of treatment. At the end of experiments, the hippocampus tissue was used for determination of glutathione content (GSH), superoxide dismutase (SOD), and catalase (CAT) activities. Furthermore, saffron significantly increased GSH, SOD, and CAT but remarkably decreased cognitive deficit, serum TNF-α, and induced nitric oxide synthase (iNOS) activity in hippocampus tissue. Our findings indicated that saffron extract may reduce hyperglycemia and hyperlipidemia risk and also reduce the oxidative stress in diabetic encephalopathy rats. This study suggested that saffron extract might be a promising candidate for the improvement of chemically induced diabetes and its complications.