The aims of the present study were to investigate in diabetic rats: (1) the chronological changes of compromised medial olivocochlear bundle (MOCB) activity and auditory brainstem responses (ABR) and (2) the effect of insulin on diabetes-related hearing dysfunction. Diabetes mellitus was induced by intraperitoneal injection of streptozotocin. Thirty male Wistar rats were divided into three groups: control (C), diabetes with insulin injection (DI), and diabetes without insulin injection (DM). Click-evoked ABR, distortion product otoacoustic emission (DPOAE) and the contralateral suppression (CS) of DPOAE were measured for all animals monthly. Throughout the experiment, the thresholds of click-evoked ABR did not differ among groups. Wave III was delayed and interpeak latency I-III was prolonged in the DM group at the age of 29 weeks (p < 0.05). The amplitudes of the CS of DPOAE were markedly decreased after the 25th week in the DM group, but not in the C and DI groups. Compared to the C group, the CS in the DI group was not attenuated at any frequency. Dysfunction of auditory efferent olivocochlear activity developed in diabetic rats presenting no evidence of hearing loss. The finding of a significant decrease of the CS of DPOAE could be used as an earlier indicator of diabetes-related hearing impairment than changes of ABRs. The time course of compromised MOCB is positively correlated with the duration of diabetes. Insulin could therefore protect against compromised MOCB.