Iron overload is frequently observed in type 2 diabetes mellitus (DM2), but the underlying mechanisms remain unclear. We hypothesize that hepcidin may be directly regulated by insulin and play an important role in iron overload in DM2. We therefore examined the hepatic iron content, serum iron parameters, intestinal iron absorption, and liver hepcidin expression in rats treated with streptozotocin (STZ), which was given alone or after insulin resistance induced by a high-fat diet. The direct effect of insulin on hepcidin and its molecular mechanisms were furthermore determined in vitro in HepG2 cells. STZ administration caused a significant reduction in liver hepcidin level and a marked increase in intestinal iron absorption and serum and hepatic iron content. Insulin obviously upregulated hepcidin expression in HepG2 cells and enhanced signal transducer and activator of transcription 3 protein synthesis and DNA binding activity. The effect of insulin on hepcidin disappeared when the signal transducer and activator of transcription 3 pathway was blocked and could be partially inhibited by U0126. In conclusion, the current study suggests that hepcidin can be directly regulated by insulin, and the suppressed liver hepcidin synthesis may be an important reason for the iron overload in DM2.