Objective: To study the possible beneficial effect of estrogen (17β-estradiol E2) on hyperglycemia, oxidative stress and liver dysfunctions in STZ-induced diabetic rats. A total of 40 albino male rats were randomly divided into four groups: a control group (I), a diabetic group (II), a group given 17β estradiol (E2) for 15 days (III), and a diabetic group given E2 for 30 days (IV). Diabetes was induced in the rats by 65 mg/kg streptozosin (STZ) via an intraperitoneal (i.p.) injection. E2 was given in a dose of 500ug/kg/day by oral gavage. Results: E2 administration significantly lowered plasma glucose levels, increased plasma insulin levels, and improved glucose tolerance of groups III and IV. In addition, E2 enhanced glutathione peroxidase (GPX) and reduced lipid peroxidation in the hepatic tissues (as compared to diabetic rats). E2 caused significant decrease of plasmatic phosphatase alkaline (PAL), lactate dehydrogenase (LDH), aspartate and lactate transaminases (AST and ALT) activities of group III and IV compared to group II. Moreover, E2 restored the histological structure of the liver and pancreas of treated groups and increased the insulin receptors expression in the liver of groups III and IV compared to diabetic rats. Notably, these beneficial effects of E2 on diabetic rats were more prominent in group IV compared to those of group III. Conclusion: E2 has a beneficial effect on hyperglycemia, oxidative stress and ameliorates the liver dysfunction in diabetic rats and these effects may be mediated through stimulating β-cell proliferation in pancreas and increased the insulin receptor expression in the liver tissues.