Type 2 Diabetes mellitus (T2DM) is characterized by peripheral insulin resistance, impaired insulin secretion, and reduced β-cell mass. Mechanisms that underlie β-cell failure include glucotoxicity, lipotoxicity, endoplasmic reticulum (ER) stress, and oxidative stress. This study was designed to assess the protective effect of trigonelline and diosgenin against changes in ER stress-associated apoptotic proteins CHOP, Caspase12, and Caspase3 and antioxidant levels in pancreas as well as adipose tissue PPARγ mRNA in T2DM rats. Markers of diabetes and obesity such as serum glucose, insulin, free fatty acid (FFA), TNF-α, IL-6, and leptin were also assessed. T2DM rats showed significantly elevated levels of pancreatic ER stress proteins and lipid peroxidation, while the antioxidants were significantly reduced. Histological examination also confirmed T2DM-associated damage in pancreas. In addition, a significant increase in serum FFA, TNF-α, IL-6, and decrease in leptin levels along with significantly decreased adipose mass and reduced PPARγ expression were observed in T2DM rats. On the other hand, trigonelline and diosgenin treatment independently brought about significant improvement in serum parameters, decrease in apoptotic ER stress proteins, and reinforced antioxidant status in pancreas. Histological examination of pancreas showed normal morphology. Treated groups also showed increased adipose tissue mass and enhanced PPARγ expression. Data from docking studies indicated good interaction of both compounds with PPARγ, and diosgenin showed better binding efficiency. These findings suggest that the insulin-sensitizing effects of trigonelline and diosgenin are mediated through moderation of ER stress and oxidative stress in pancreas as well as by PPARγ activation in adipose tissue.