Endothelial nitric oxide synthase (eNOS) dysfunction induces insulin resistance and glucose intolerance. Tetrahydrobiopterin (BH4) is an essential cofactor of eNOS that regulates eNOS activity. In the diabetic state, BH4 is oxidized to 7,8-dihydrobiopterin, which leads to eNOS dysfunction owing to eNOS uncoupling. The current study investigates the effects of BH4 on glucose metabolism and insulin sensitivity in diabetic mice. Single administration of BH4 lowered fasting blood glucose levels in wild-type mice with streptozotocin (STZ)-induced diabetes and alleviated eNOS dysfunction by increasing eNOS dimerization in the liver of these mice. Liver has a critical role in glucose-lowering effects of BH4 through suppression of hepatic gluconeogenesis. BH4 activated AMP kinase (AMPK), and the suppressing effect of BH4 on gluconeogenesis was AMPK-dependent. In addition, the glucose-lowering effect and activation of AMPK by BH4 did not appear in mice with STZ-induced diabetes lacking eNOS. Consecutive administration of BH4 in ob/ob mice ameliorated glucose intolerance and insulin resistance. Taken together, BH4 suppresses hepatic gluconeogenesis in an eNOS-dependent manner, and BH4 has a glucose-lowering effect as well as an insulin-sensitizing effect in diabetic mice. BH4 has potential in the treatment of type 2 diabetes.