Diabetes mellitus (DM) is a metabolic disorder manifested by hyperglycemia. Daming Capsule (DMC), a combination of traditional Chinese herbs, is used clinically as a lipid-lowering drug. This study was designed to evaluate if DMC possesses an anti-hyperglycemic effect and to elucidate the underlying mechanisms. Compared to diabetic rats, the rats received DMC (200 mg/kg/d) had significantly lower blood lipid and glucose levels. DMC markedly restored the decreased secretion of GLP-1 and GIP as well as the coding gene GCG and GIP in ileum. Moreover, DMC normalized depressed GCG and GIP transcription by significantly enhancing the GSK-3β/β-catenin signaling pathway and expression of TCF7L2, a transactivator of GCG and GIP in diabetic rats. DMC possesses an anti-hyperglycemic property characterized by preservation/stimulation of GLP-1 and GIP secretion in DM rats. Here, we proposed DMC → GSK-3β/β-catenin↑ → TCF7L2↑ → GLP-1, GIP secretion↑ → blood glucose↓ as a regulatory pathway of blood glucose homeostasis. Our findings suggest DMC as a promising therapeutic drug in the clinical treatment of diabetes.