The current study was intended to fabricate and evaluate ultrasonically assisted quercetin nanoemulsion (Que-NE) for improved bioavailability and therapeutic effectiveness against diabetes mellitus in rats. Ethyl oleate, Tween 20, and Labrasol were chosen as oil, surfactant, and cosurfactant, respectively. Box–Behnken design (BBD) was employed to study the influence of process variables such as % surfactant and cosurfactant mixture (Smix) (5 to 7%), % amplitude (20–30%) and sonication time (2.5–7.5 min) on droplet size, polydispersibility index (PDI), and % entrapment efficiency (%EE) were studied. The optimization predicted that 9% Smix at 25% amplitude for 2.5 min would produce Que-NE with a droplet size of 125.51 nm, 0.215 PDI, and 87.04% EE. Moreover, the optimized Que-NE exhibited appreciable droplet size and PDI when stored at 5, 30, and 40 °C for 45 days. Also, the morphological characterization by transmission electron microscope (TEM) indicated the spherical shape of the optimized nanoemulsion. Furthermore, the Que-NE compared to pure quercetin exhibited superior release and enhanced oral bioavailability. The streptozocin-induced antidiabetic study in rats revealed that the Que-NE had remarkable protective and therapeutic properties in managing body weight, blood glucose level, lipid profile, and tissue injury markers, alongside the structure of pancreatic β-cells and hepatocytes being protected. Thus, the developed Que-NE could be of potential use as a substitute strategy for diabetes.