Nanotechnology is used to overcome fundamental flaws in today's marketed pharmaceuticals that obstruct therapy, like restricted solubility and quick release of drugs into the bloodstream. In both human and animal researches, melatonin was demonstrated to regulate glucose levels. Despite the fact that melatonin is quickly transported through the mucosa, its sensitivity to be oxidized creates a difficulty in achieving the required dose. Additionally, due to its variable absorption and poor oral bioavailability necessitates the development of alternative delivery methods. The study aimed to synthesize melatonin loaded chitosan/lecithin (Mel-C/L) nanoparticles to be assessed in the treatment of streptozotocin (STZ)-induced diabetes in rats. The antioxidant, anti-inflammatory, and cytotoxicity properties of nanoparticles were estimated to determine the safety of manufactured nanoparticles for in vivo studies. In addition, Mel-C/L nanoparticles were administered to rats for eight weeks after inducing hyperglycemia. The therapeutic effect of Mel-C/L nanoparticles was assessed in all experimental groups by detecting insulin and blood glucose levels; observing improvements in liver and kidney functions as well as histological and immunohistochemical evaluation of rats’ pancreatic sections. The results proved that Mel-C/L nanoparticles showed remarkable anti-inflammatory, anti-coagulant, and anti-oxidant effects, in addition to its efficiency in reducing blood glucose levels of STZ-induced diabetic rats and great ability to promote the regeneration of pancreatic beta (β)-cells. Furthermore, Mel-C/L nanoparticles elevated the insulin level; and decreased the elevated levels of urea, creatinine and cholesterol. In conclusion, nanoparticles application decreased the administrated melatonin dose that in turn can diminish the side effects of free melatonin administration.