Recent studies have indicated that the blood glucose level of rats with streptozotocin (STZ)-induced diabetes (type 1) is normalized without an increase in the plasma insulin level by administration of sodium orthovanadate in the drinking water. The mechanism of this insulin-like effect of vanadate is unknown. In this study, we investigated whether vanadyl ion, which is less toxic than vanadate to rats, also has an insulin-like effect in rats with STZ-induced diabetes. When rats with STZ-induced diabetes were given a daily i.p. injection of vanadyl sulphate (9.3 and 4.6 mg vanadium/kg body weight), their blood glucose level decreased from about 22.2 to about 7.2 mmol glucose/l within 2 days and remained low for at least 12 weeks. This treatment did not affect their low plasma insulin level. Quantitative electron spin resonance (ESR) spectrometry showed that most of the vanadium (about 90%) in their tissues was present as a vanadyl form (VO2+). ESR analysis also showed that the vanadyl ion in tissues was bound endogenously with four oxygen ligands from either water or oxyamino acid residues in proteins. Vanadyl sulphate accelerated glucose incorporation into adipocytes of rats, suggesting that the action of vanadyl ion is peripheral. Interestingly, vanadyl sulphate at a high concentration (about 10 mmol/l) was more effective than insulin in enhancing glucose uptake. This study demonstrated that: (1) vanadyl sulphate (+4 oxidation state), like vanadate ion, normalizes the blood glucose levels of rats with STZ-induced diabetes; (2) the action of vanadyl ion is peripheral; and (3) the active form of vanadium for an insulin-like effect may be a vanadyl form, not vanadate.