Increased hepatic glucose output is one of the major causes of fasting hyperglycemia in diabetic patients. In this study, we investigated the mechanism of action of coagulanolide on hepatic glucose, regulating enzymes in type 2 diabetic C57BL/KsJ-db/db (db/db) mice. Coagulanolide is an active component of Withania coagulans fruit. Oral administration of coagulanolide for 3 weeks decreases fasting blood glucose and plasma insulin significantly, and it improves glucose tolerance in the db/db mice group. The enzyme activity and protein expression of glucokinase and pyruvate kinase was significantly enhanced in coagulanolide-treated db/db group when compared with untreated one. On the other hand, activities and protein expression of fructose-1,6-bisphosphatase, glucose 6-phosphatase, phosphoenolpyruvate carboxykinase, and glycogen phosphorylase enzymes were significantly lowered in treated group. The treatment with coagulanolide also normalizes the concentrations of plasma cholesterol, triglyceride, free fatty acid, low-density lipoprotein cholesterol, and high-density lipoprotein cholesterol in the db/db mice. These findings suggested that the coagulanolide is useful in the control of fasting hyperglycemia in type 2 diabetes by regulating the production of hepatic glucose.