Dysregulated expression of microRNAs (miRNAs or miRs) has been implicated in the pathophysiology of type 2 diabetes mellitus (T2DM). However, their underlying role in the complication of detrusor fibrosis remains poorly understood. Therefore, this study aimed to examine the potential functional relevance of miR-363 in detrusor fibrosis of rats with streptozotocin (STZ)-induced T2DM through the predicted target gene collagen type I alpha 2 (Col1a2). Immunohistochemical analysis found an increase in the positive expression of collagen type III alpha 1 (Col3a1) and Col1a2 in detrusor tissues, where miR-363 expression was decreased. Next, gain- and loss-of-function experiments were performed to clarify the effects of miR-363 and Col1a2 on the activities of bladder detrusor cells. Of note, binding affinity between miR-363 and Col1a2 was verified by a dual-luciferase reporter gene assay and RNA immunoprecipitation (RIP) assay. Upregulated miR-363 inhibited Col1a2 expression, which led to increased expression of B-cell lymphoma 2 (Bcl-2) and Smad7 and accelerated cell viability, along with decreases in cell apoptosis and Col3a1, Bcl-2-associated X protein (Bax), transforming growth factor (TGF)-β1, and Smad4 expressions. In conclusion, miR-363 upregulation reduces detrusor fibrosis in rats with STZ-induced T2DM through suppression of the TGF-β1/Smad signaling pathway by targeting Col1a2. Therefore, our study provided further insights for the development of new therapeutic targets for T2DM.