Orexin regulates food intake and energy expenditure. Here, we test the ability of orexin-A (OXA, hypocretin-1) at improving metabolic control in type 2 diabetic animals and elaborate potential mechanisms of action. Rats with experimentally induced type 2 diabetes by a combination of streptozotocin injection and high-fat diet feeding were chronically infused with OXA. In vitro experiments were conducted on isolated pancreatic islets, primary adipocytes and insulin secreting INS-1E cells. OXA improved glucose control, enhanced insulin sensitivity and attenuated pancreatic β-cell loss in type 2 diabetic rats. Ex vivo, apoptotic death of pancreatic islets isolated from OXA-treated type 2 diabetic animals as well as the impairment of glucose-stimulated insulin secretion were attenuated, as compared to islets derived from vehicle-treated rats. OXA reduced plasma tumor necrosis factor-α (TNF-α) and non-esterified fatty acids (NEFA) levels in type 2 diabetic rats. OXA decreased palmitate- and TNF-α-induced apoptosis of INS-1E cells. OXA improves glucose control by enhancing insulin sensitivity and protecting β-cells from apoptotic cell death in type 2 diabetic animals.