Background Vanadyl sulfate (VS) and taurine are two promising agents in the treatment of diabetes related to their antihyperglycemic, antihyperlipidemic, and hyperinsulinemic effects. Data about the effects of VS on the oxidant–antioxidant system is limited and controversial. However, taurine is a well-documented antioxidant agent and our aim was to investigate the effects of VS, taurine and VS and taurine combination on the oxidative–antioxidative systems in streptozotocin–nicotinamide (STZ-NA) diabetic rats. Methods Nicotinamide (230 mg/kg, i.p.) and streptozotocin (65 mg/kg, i.p.) were administered. VS (0.75 mg/mL) and taurine (1%) were added to drinking water for 5 weeks. Rats were divided as control (C), diabetes (D), diabetes + VS (D + VS), diabetes + taurine (D + T), diabetes + VS and taurine (D + VST). Plasma and tissue malondialdehyde (MDA) levels were measured by high-performance liquid chromatography and spectrophotometry, respectively. Paraoxonase and arylesterase activities were measured by spectrophotometric methods and superoxide dismutase (SOD) and glutathione peroxidase (GSH-Px) activities were determined using commercial kits. Results VS, taurine and VS and taurine combination treatments reduced the enhanced blood glucose, serum total cholesterol and triglyceride, tissue MDA and plasma MDA (except in the D + VS group) levels and increased the reduced serum insulin level, serum paraoxonase and arylesterase activities, GSH-Px activity and SOD activity (except in the D + VS group). Conclusions The findings of the present study suggest that VS and taurine exert beneficial effects on the blood glucose and lipid levels in STZ-NA diabetic rats. However, VS might exert prooxidative or antioxidative effects in various components of the body and taurine and VS combination might be an alternative for sole VS administration.