Background: Mesenchymal stem cells (MSCs) have emerged as a promising therapy for type 2 diabetes (T2D). Mechanistic researches demonstrate that the anti-diabetic effect of MSCs is partially mediated by eliciting macrophages into an anti-inflammatory phenotype thus alleviating insulin resistance. However, single MSC infusion is insufficient to ameliorate sustained hyperglycemia or normalize blood glucose levels. In this study, we used decitabine (DAC), which is involved in the regulation of macrophage polarization, to test whether MSCs combined with decitabine can prolong and enhance the anti-diabetic effect in T2D mice. Methods: High-fat diet (HFD) and streptozocin (STZ) were given to induce T2D mouse model. Successfully induced T2D mice were randomly divided into four groups: T2D group, MSC group, DAC group, and MSC + DAC group. Blood glucose was monitored, and glucose tolerance and insulin sensitivity were evaluated during the entire analysis period. Epididymal fat was extracted for analysis of macrophage phenotype and inflammation in adipose tissue. In vitro, we examined the effect of MSC + DAC on macrophage polarization in bone marrow-derived macrophages (BMDMs) and explore the possible mechanism. Results: MSC infusion effectively improved insulin sensitivity and glucose homeostasis in T2D mice within 1 week, whereas combination therapy of MSCs + DAC extended the anti-diabetic effects of MSCs from 1 to 4 weeks (the end of the observation). Correspondingly, more M2 macrophages in adipose tissue were observed in the combination therapy group over the entire study period. In vitro, compared with the MSC group, MSCs combined with decitabine more effectively polarized M1 macrophages to M2 macrophages. Further analysis showed that the effect of MSC + DAC on macrophage polarization was largely abrogated by the peroxisome proliferator-activated receptor gamma (PPAR.) antagonist GW9662. Conclusions: Our data suggest that MSCs combined with decitabine can more effectively alleviate insulin resistance and prolong and enhance the anti-diabetic effect of MSCs in T2D mice in part by prompting M2 polarization in a PPAR.-dependent manner. Thus, decitabine may be an applicable addition to MSCs for diabetes therapy.