Worldwide demand for new anti-diabetic drugs from plant sources has increased as diabetes mellitus has become a global epidemic. In the era of herbal medicines, polyherbal formulations offer higher therapeutic efficacy than single plants due to synergistic effects. Therefore, the objective was to develop a novel anti-diabetic polyherbal formulation containing mixtures of three plants: Azadirachta indica leaves, Tinospora cordifolia stem and Ocimum sanctum leaves extracts. The eight different plant formulations (F1 to F8) were formulated while F1 to F3 contained a single plant extract. Hyperglycemia was developed in rodents by ingestion of streptozotocin. The experimental animals’ serum sugar level, body weight and lipid profile were determined. In the diabetic rats treated orally with F1 to F8, the blood glucose level decreased significantly compared to the diabetic control group. Similar effects were also observed in the diabetic rats treated with glibenclamide. In addition, F1 to F8 controlled lipid level, namely total cholesterol (CHL), triglycerides (TGL), low-density lipoprotein (LDL), and high-density lipoprotein (HDL) levels in rodents. The findings suggested that F7 showed higher anti-diabetic and antihyperlipidemic efficiency when equated to the other formulations. It was also found that the formulations (F1 to F3) containing a single plant extract exhibited lower therapeutic efficacy than the polyherbal formulations (F4 to F8). The results suggest that the higher therapeutic efficacy of the polyherbal formulation is due to the synergistic effect of the different phytoconstituents in the plant mixtures.