The aim of this study was to evaluate the impact of the green algae Ulva lactuca and its hydroethanolic extract on insulin resistance and cholesterol reverse transport in type 2 diabetic (T2D) rats. Rats had T2D induced by a high-fat diet (HFD) for 5 weeks followed by intraperitoneal injection of streptozotocin. Diabetic rats were divided into three groups and were fed a HFD in the presence or absence of 1% alga (HFD-Alg) or 1% of its hydroethanolic extract (HFD-Ext), for 4 weeks. The control group consumed 20% casein combined with 5% lipids. Hyperglycemia, insulin resistance, hypercholesterolemia, and hypertriglyceridemia were noted in HFD rats vs control rats. Whole alga and its extract decreased these parameters vs the HFD. Moreover, fecal total cholesterol and triacylglycerols levels were lowered in HFD group vs C group, but were increased with HFD-Alg vs HFD. Compared with the Control, the HFD group had decreased lecithin:cholesterol acyltransferase (LCAT) activity, apolipoprotein A-I (ApoA-I), high-density lipoprotein (HDL₃)-phospholipids (PL), and HDL₂-cholesteryl ester (CE) levels, but increased HDL₃-unesterified cholesterol (UC) levels. Furthermore, compared with the HFD group, the HFD-Alg and HFD-Ext groups had increased LCAT activity, ApoA-I, HDL₃-PL, and HDL₂-CE levels and decreased HDL₃-UC levels. In addition, in the HFD-Ext group, LCAT activity and ApoA-1 levels were decreased vs the HFD-Alg whereas HDL₃-UC levels were increased. In conclusion, these results indicate that U. lactuca and its hydroethanolic extract have curative effect on T2D. Therefore, this alga could be considered a functional food supplement for the treatment and prevention of diabetes.