Purpose: The study aimed to assess the acute toxicity and anti-diabetic activity of Halimedagracilis (green marine alga). Methods: The Halimedagraciliswere collected from the coastal area of the Gulf of Mannar biosphere reserve and shade dried. Methanolic extract of Halimedagracilis (MEHG) was prepared and it was screened for acute toxicity and anti-diabetic activity in the Zebrafish model. In the Acute toxicity study, the Zebrafishes were grouped into 6 groups and dosed with 6.25, 12.5, 25, 50, and 100mg/L of MEHG and observed at 0, 24, 48, 72, and 96 hours’ intervals. Foranti-diabetic activity analysis diabetes was induced using streptozotocin (STZ). The Zebrafish were divided into six groups- control group, positive control, diabetic Zebrafish with three doses of MEHG, and standard control (treated with metformin). Results: Acute toxicity studyshowed no significant behavioral changes and LC50 was determined as 100mg/L. In the diabetic study, test groups when compared to the control group showed: a significant reduction in both fasting and postprandial blood glucose levels and significant changes in the regeneration of pancreatic β-cells, and reduced vacuolization in the islets of Langerhans. Images of the regenerating caudal fins taken at 24, 48 and 72-hours post-amputation displayed significant limb regeneration in MEHG treated fish compared to the control group. Conclusion: These results prove that MEHG in STZ- induced diabetic Zebrafish possess potent anti-diabetic action by ameliorating blood glucose regulation, promoting pancreatic cell regeneration,minimizing long-term diabetic complications bypreventing the emergence of metabolic memory but no behavioral changes.