Caesalpinia sappan L. (CS) is widely used to treat diabetic complications in south-east Asia, specifically in traditional Chinese medicine. This study intends to explain the molecular mechanism of how chemical constituents of CS interrelate with different signaling pathways and receptors involved in T2DM. GC-MS was employed to identify the chemical compounds from the methanol extract of CS wood (MECSW). Lipinski’s rule of five was applied, and 33 bioactive constituents have been screened from the CS extract. After that, 124 common targets and 26 compounds associated with T2DM were identified by mining several public databases. Protein–protein interactions and compound-target network were constructed using the STRING database and Cytoscape tool. Protein–protein interactions were identified in 121 interconnected nodes active in T2DM and peroxisome proliferator-activated receptor gamma (PPARG) as key target receptors. Furthermore, pathway compound target (PCT) analysis using the merger algorithm plugin of Cytoscape revealed 121 nodes from common T2DM targets, 33 nodes from MECSW compounds and 9 nodes of the KEGG pathway. Moreover, network topology analysis determined “Fisetin tetramethyl ether” as the key chemical compound. The DAVID online tool determined seven signaling receptors, among which PPARG was found most significant in T2DM progression. Gene ontology and KEGG pathway analysis implied the involvement of nine pathways, and the peroxisome proliferator-activated receptor (PPAR) pathway was selected as the hub signaling pathway. Finally, molecular docking and quantum chemistry analysis confirmed the strong binding affinity and reactive chemical nature of fisetin tetramethyl ether with target receptors exceeding that of the conventional drug (metformin), PPARs agonist (rosiglitazone) and co-crystallized ligands, indicating that fisetin could be a potential drug of choice in T2DM management. This study depicts the interrelationship of the bioactive compounds of MECSW with the T2DM-associated signaling pathways and target receptors. It also proposes a more pharmaceutically effective substance, fisetin tetramethyl ether, over the standard drug that activates PPARG protein in the PPAR signaling pathway of T2DM.