Diabetes mellitus type 1 is an autoimmune disorder caused by lymphocytic infiltration and beta cells destruction. Curcumin has been identified as a potent inducer of heme-oxygenase-1 (HO-1), a redox sensitive inducible protein that provides protection against various forms of stress. A novel water soluble curcumin derivative has been developed to overcome low in vivo bioavailability of curcumin, and to investigate its protective effect on streptozotocin- induced type 1 diabetes in rats, determining whether its action is mediated by inducible hemeOxygenase-1. Type-1 diabetes was induced by injection of STZ (65mg/kg body weight). Rats were divided into 2 groups: group I control rats, which were subdivided into :- control group , control group receiving curcumin derivative, control group receiving HO-1 inducer CoPP, control group receiving HO inhibitor ZnPP, control group receiving curcumin derivative and HO- inhibitor ZnPP. Group II diabetic rats, which were subdivided into: - diabetic group, diabetic group receiving curcumin derivative, diabetic group receiving HO inducer CoPP, diabetic group receiving HO inhibitor ZnPP and diabetic group receiving curcumin derivative and HO inhibitor ZnPP . At the planned scarification time (after 45 days), fasting blood samples were withdrawn for estimation of plasma glucose, plasma insulin and lipid profiles. Animals were sacrificed; pancreas was excised for the heme oxygenase 1expression, activity and malondialdehyde estimation. The new water-soluble curcumin derivative by its small dose (10 mg/Kg/day orally for45 days) has the ability to decrease plasma glucose and increase plasma insulin levels significantly in diabetic rats and its action may be mediated by induction of heme oxygenase-1 gene in pancreatic tissue. It decreases total cholesterol, triglycerides, LDL cholesterol and increases HDL cholesterol levels. It also decreases lipid peroxides (malondialdehyde) by a mechanism other than heme oxygenase- 1, may be through other antioxidant mechanisms.