The current study aimed to establish the mechanisms of antidiabetic activity of methanolic extract of Punica granatum leaves (MEPGL) in nicotinamide/streptozotocin-induced type 2 diabetes in rats. Phytochemical screening, HPLC analysis, and acute toxicity study of MEPGL were carried out. Various concentrations of MEPGL (100, 200, 400, and 600 mg/kg) were administered orally to diabetic rats for 45 days on a daily basis. The antidiabetic effect of MEPGL was examined by measuring blood glucose, plasma insulin, and glycated hemoglobin (HbA1c) levels, as well as with an oral glucose tolerance test. The antioxidant effect of MEPGL was determined by analyzing hepatic and renal antioxidant markers, namely superoxide dismutase (SOD), catalase (CAT), glutathione peroxidase (GPx), reduced glutathione (GSH), and lipid peroxidation. The other biochemical markers alanine transaminase (ALT), aspartate transaminase (AST), alkaline phosphatase (ALP), urea, and creatinine, as well as total cholesterol, triglycerides, and high-density lipoprotein (HDL) were also studied. Type 2 diabetes significantly altered these parameters, while oral administration of the MEPGL significantly ameliorated them. Moreover, the pancreatic histopathological changes were attenuated with MEPGL treatment. In a nutshell, oral MEPGL administration in diabetic rats showed antidiabetic activity due to its antioxidant activity, most probably due to the gallic acid, ellagic acid, and apigenin found in MEPGL.