Diabetes is a persistent metabolic disorder, which often leads to depression as a result of the impaired neurotransmitter function. Insulin is believed to have antidepressant effects in depression associated with diabetes; however, the mechanism underlying the postulated effect is poorly understood. In the present study, it is hypothesized that insulin mediates an antidepressant effect in streptozotocin (STZ) induced diabetes in mice through modulation of the serotonin system in the brain. Therefore, the current study investigated the antidepressant effect of insulin in STZ induced diabetes in mice and insulin mediated modulation in the brain serotonin system. In addition, the possible pathways that lead to altered serotonin levels as a result of insulin administration were examined. Experimentally, Swiss albino mice of either sex were rendered diabetic by a single intraperitoneal (i.p.) injection of STZ. After one week, diabetic mice received a single dose of either insulin or saline or escitalopram for 14 days. Thereafter, behavioral studies were conducted to test the behavioral despair effects using forced swim test (FST) and tail suspension test (TST), followed by biochemical estimations of serotonin concentrations and monoamine oxidase (MAO) activity in the whole brain content. The results demonstrated that, STZ treated diabetic mice exhibited an increased duration of immobility in FST and TST as compared to non-diabetic mice, while insulin treatment significantly reversed the effect. Biochemical assays revealed that administration of insulin attenuated STZ treated diabetes induced neurochemical alterations as indicated by elevated serotonin levels and decreased MAO-A and MAO-B activities in the brain. Collectively, the data indicate that insulin exhibits antidepressant effects in depression associated with STZ induced diabetes in mice through the elevation of the brain serotonin levels.