Based on high throughput screening of our chemical library, we identified two 4,5-dihydro-2<i>H</i>-benzo[<i>e</i>]indazole derivatives (<b>5d</b> and <b>5g</b>), which displayed a significant effect on glucose uptake in L6 skeletal muscle cells. Based on these lead molecules, a series of benzo[<i>e</i>]indazole derivatives were prepared. Among all the synthesized dihydro-2<i>H</i>-benzo[<i>e</i>]indazoles, 8-(methylthio)-2-phenyl-6-<i>p</i>-tolyl-4,5-dihydro-2<i>H</i>-benzo[<i>e</i>]indazole-9-carboxylate (<b>5e</b>) showed significant glucose uptake stimulation in L6 skeletal muscle cells, even better than lead compounds. Additionally, <b>5e</b> decreased glucagon-induced glucose release in HepG2 hepatoma cells. The 2<i>H</i>-benzo[<i>e</i>]indazole <b>5e</b> exerted an antihyperglycemic effect in normal, sucrose challenged streptozotocin-induced diabetic rats and type 2 diabetic <i>db</i>/<i>db</i> mice. Treatment with <b>5e</b> at a dose of 30 mg kg<sup>-1</sup> in <i>db</i>/<i>db</i> mice caused a significant decrease in triglyceride and total cholesterol levels and increased the HDL-C level in a significant manner. The mechanistic studies revealed that the 2<i>H</i>-benzo[<i>e</i>]indazole <b>5e</b> significantly stimulated insulin-induced signaling at the level of IRS-1, Akt and GSK-3β in L6 skeletal muscle cells, possibly by inhibiting protein tyrosine phosphatase-1B. This new 2<i>H</i>-benzo[<i>e</i>]indazole derivative has potential for the treatment of diabetes with improved lipid profile.