Seaweed-based analog rice produced from local flours and modified seaweed flour has emerged as a promising functional food for improving metabolic health. This study evaluated the effect of seaweed-based analog rice consumption on blood cholesterol levels in individuals with prediabetes and type 2 diabetes mellitus. The analog rice was first characterized through proximate and dietary fiber analyses, followed by a 42-day clinical intervention. A total of 40 participants were enrolled and randomly assigned to either a control group consuming regular rice (n = 20) or an intervention group consuming seaweed-based analog rice (n = 20). Both groups received identical side dishes and vegetables to minimize dietary variation. Blood cholesterol levels were measured before and after the intervention. The results demonstrated that consumption of seaweed-based analog rice significantly reduced total blood cholesterol levels in the intervention group, from 233 ± 1.3 mg/dL at baseline to 181 ± 1.4 mg/dL after 42 days (p < 0.05). In contrast, no significant change was observed in the control group consuming regular rice, with cholesterol levels changing from 200 ± 2.1 mg/dL to 201 ± 2.2 mg/dL (p > 0.05). Proximate analysis of the analog rice revealed a composition of 7.72 ± 0.27% moisture, 10.53 ± 0.02% protein, 2.64 ± 0.07% fat, 1.11 ± 0.01% ash, 75.03 ± 1.97% carbohydrates, and 10.17 ± 0.15% dietary fiber. These findings suggest that seaweed-based analog rice is a fiber-rich functional food with the potential to improve blood cholesterol profiles in individuals with prediabetes and type 2 diabetes, supporting its application as a healthier alternative staple food.