Chitosan coated porous titanium alloy implant (CTI) is demonstrated a promising approach to improve osseointegration capacity of pure porous titanium alloy implant (TI). Since chitosan has been demonstrated to exhibit antioxidant activity, we propose CTI may ameliorate the ROS overproduction, thus reverse the poor osseointegration under diabetic conditions, and investigate the underlying mechanisms. Primary rat osteoblasts incubated on the TI and the CTI were subjected to normal serum (NS), diabetic serum (DS), DS + NAC (a potent ROS inhibitor) and DS + LY294002 (a PI3K/AKT-specific inhibitor). In vivo study was performed on diabetic sheep implanted with TI or CTI into the bone defects on crista iliaca. Results showed that diabetes-induced ROS overproduction led to osteoblast dysfunction and apoptosis, concomitant with the inhibition of AKT in osteoblasts on the TI substrate. While CTI stimulated AKT phosphorylation through ROS attenuation, thus reversed osteoblast dysfunction evidenced by improved osteoblast adhesion, increased proliferation and ALP activity, and decreased cytotoxicity and apoptotic rate, which exerted same effect to NAC treatment on the TI. These effects were further confirmed by the improved osseointegration within the CTI in vivo evidenced by Micro-CT and histological examinations. In addition, the aforementioned promotive effects afforded by CTI were abolished by blocking PI3K/AKT pathway with addition of LY294002. These results demonstrate that the chitosan coating markedly ameliorates diabetes-induced impaired bio-performance of TI via ROS-mediated reactivation of PI3K/AKT pathway, which elicits a new surface functionalization strategy for better clinical performance of titanium implant in diabetic patients.