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Vanadium, a trace element in human cells and regarded as an essential nutrient, plays an active role in all tissues. It is known that peroxovanadate-nicotinic acid (POV), a complex compound of vanadium, can decrease hyperglycemia; however, its biochemical mechanism remains unclear. The object of the present study is to explore the hypoglycemia mechanism of POV at gene molecular levels. Rats rendered diabetic with streptozotocin were treated with POV. Total RNA was isolated from rat liver, and phenylalanine hydroxylase (PAH) mRNA abundance was determined by reverse transcriptase-polymerase chain reaction. PAH activity, blood glucose, and lipid levels were measured. Significantly increased hepatic PAH activity and corresponding mRNA with concomitant hyperglycemia and hyperlipemia were found in diabetic rats. These levels returned to normal after POV treatment and accompanied by negative glucosuria, normoglycemia, and normolipemia. The results from the current study indicates one of the mechanisms of POV action is to inhibit PAH gene expression and PAH activity, thus decreasing gluconeogenesis and hyperglycemia. At the same time, POV is able to promote diabetic recovery by lowering hyperlipemia.