Type 2 diabetes is a multifactorial disorder coupled with impaired glucose tolerance, diminished insulin sensitivity and hyperlipidemia. Incessant hyperglycemia and hyperlipidemia led a towering risk to develop cardiovascular hitches with end-stage renal failure. Leaves of Nyctanthes arbor-tristis L. (NAT) (family: Oleaceae) is traditionally used by tribes of Assam for various ailments without proper scientific validation and appropriate mechanism of action for its activity. Hence, we aimed to evaluate the mechanism involved in the hypoglycemic and hypolipidemic effects of NAT leaves in high-fat diet (HFD)-streptozotocin (STZ)-induced diabetic rats. Male Sprague-Dawley rats were fed with in-house prepared high-fat diet (HFD) for a period of 4 weeks to create insulin resistance. Streptozotocin was injected intraperitoneally to these rats to cause β-cell destructions to create a model of type 2 diabetes. Our results have shown that NAT extract has a dose-dependent hypoglycemic and hypolipidemic activity in controlling the early biochemical parameters of kidney and lipids. Moreover, the extract has anti-oxidant and anti-inflammatory activities which were more pronounced at a dose of 400 mg/kg body weight. NAT treatment group also restored the normal architecture of the kidney and aorta tissue. GC-MS data analysis revealed the presence of several active compounds which are directly or indirectly responsible for its anti-diabetic and anti-hyperlipidemic activity. The apparent mechanism of NAT for its nephroprotection may be due to the suppression of hyperglycemia-mediated oxidative stress and amelioration of inflammatory cascades allied with NF-kB activation.