This study was designed to improve the absorption and hypoglycemic efficacy of berberine (BBR), which is a substrate of P-glycoprotein (P-gp), by combination with a P-gp inhibitor tetrandrine (Tet). Flow cytometry and LC-MS/MS were used to determine the cellular efflux or retention of chemicals. Pharmacokinetic study was performed in ICR mice following oral administration of the study compounds. The hypoglycemic efficacies of the compounds were evaluated in diabetic KK-Ay mice. In the in vitro experiments, Tet significantly inhibited the efflux and increased the uptake of P-gp substrates rhodamine-123 as well as BBR in MCF7/DOX cells and Caco-2 intestinal cells. Meanwhile, Tet greatly reduced the expression of P-gp in Caco-2 cells. The inhibition of BBR efflux by Tet was translated into improved pharmacokinetics in vivo. When co-administered, Tet dose-dependently increased the average maximum concentration (Cmax) and area under concentration-time curve (AUC0–24) of BBR in mice. Tet itself had no impact on glucose metabolism. However, it greatly potentiated the hypoglycemic efficacy of BBR in diabetic KK-Ay mice. In addition, we found that Tet had moderate inhibitory effect on the catalytic activity of CYP3A4, which played a role in the bio-transformation of BBR, and this may also take part in the improvement of the pharmacokinetics of BBR. In summary, combination with P-gp inhibitors such as Tet can improve the pharmacokinetics and hypoglycemic efficacy of BBR greatly; this implicates a feasible strategy for exploring the therapeutic effects of BBR and other pharmaceuticals which are substrates of P-gp.