Background and purpose: Protein misfolding and subsequent amyloid formation are associated with various diseases like localized amyloidosis, type II diabetes, and other neurodegenerative diseases. Insulin can undergo fibrillation under specific physiological conditions, leading to the formation of localized amyloid deposits. Repeated subcutaneous administration of insulin fibrils induces amyloid mass at injection sites. Experimental approach: This study investigated the pathological consequences of insulin fibril deposition in a rat model and evaluated the anti-amyloid efficacy of iota-carrageenan (CG) and its liposomal nanoformulation (nCG). Repeated subcutaneous administration of insulin for 28 days induced the formation of a well-defined amyloid mass. Key results: Treatment with nCG markedly reduced amyloid accumulation and effectively suppressed amyloid progression. Histopathological examination demonstrated a concentration-dependent reduction in amyloid deposits following CG treatment, while nCG-treated groups exhibited no detectable amyloid accumulation. The formation and inhibition of amyloid were further validated by hematoxylin and eosin (H&E), Congo red and thioflavin T (ThT) staining. In addition, nCG showed excellent biocompatibility, with no observable pathological alterations in major organs. Conclusion: Collectively, these findings indicate that both CG and nCG possess significant anti-amyloid activity, with nanoformulated CG showing enhanced efficacy in preventing insulin-induced localized amyloidosis.