<p><i>Microcystis aeruginosa</i> is increasingly recognized as a valuable microbial source of bioactive secondary metabolites; however, the biotechnological potential of its pigments as antidiabetic agents remains largely unexplored. This study aimed to valorize <i>M. aeruginosa</i> biomass by isolating five major pigment derivatives and evaluating their antidiabetic activity in a streptozotocin-induced diabetic rat model. The algal extract was prepared, and five major compounds were separated, purified, and were identified. The two compounds, 1 and 5, were identified by their full spectral data as Dihydroxychlorophyllide a and Pheophytin a. The remaining three purified compounds, 2, 3, and 4, were identified based on their ¹H- and ¹³C-NMR and ESI–MS data, as Chlorophyll-a, Hydroxypheophytin, and Anthraxanthin. Crucially, these isolated pigment fractions were determined to be non-toxic. Their antidiabetic effect on streptozotocin-induced diabetes was assessed in rat model with emphasis on blood glucose regulation, insulin receptor expression, GLUT4 levels, PI3K/AKT signaling, PKC/MAPK activity, and inflammatory biomarkers. Treatment with the isolated metabolites, particularly Pheophytin a, significantly mitigated hyperglycemia, upregulated insulin receptor and GLUT4 expression, activated the PI3K/AKT signaling pathway, and suppressed TNF-α mediated inflammation. Histological analysis confirmed that Compounds 2, 3, and 5 effectively preserved pancreatic architecture and protected Islets of Langerhans from diabetic atrophy and fibrosis. These findings demonstrate the novelty of identifying potent antidiabetic activity in <i>M. aeruginosa</i> pigments and support the biotechnological relevance of this cyanobacterium as a safe producer of bioactive metabolites for therapeutic applications.</p> Graphical abstract <p></p>