(1) Background: Almost 500 million people worldwide are suffering from diabetes. Since ancient times, humans have used medicinal plants for the treatment of diabetes. Medicinal plants continue to serve as natural sources for the discovery of antidiabetic compounds. Prangos pabularia Lindl. is a widely distributed herb with large reserves in Tajikistan. Its roots and fruits have been used in Tajik traditional medicine. To our best knowledge, there are no previously published reports concerning the antidiabetic activity and the chemical composition of the essential oil obtained from roots of P. pabularia. (2) Methods: The volatile secondary metabolites were obtained by hydrodistillation from the underground parts of P. pabularia growing wild in Tajikistan and were analyzed by gas chromatography (GC) and gas chromatography-mass spectrometry (GC-MS). Protein tyrosine phosphatase 1B (PTP-1B) inhibition assay and molecular docking analysis were carried out to evaluate the potential antidiabetic activity of the P. pabularia essential oil. (3) Results: The main constituents of the volatile oil of P. pabularia were 5-pentylcyclohexa-1,3-diene (44.6%), menthone (12.6%), 1-tridecyne (10.9%), and osthole (6.0%). PTP-1B inhibition assay of the essential oil and osthole resulted in significant inhibitory activity with an IC50 value of 0.06 ± 0.01 and 0.93 ± 0.1 μg/mL. Molecular docking analysis suggests volatile compounds such as osthole inhibit PTP-1B, and the results are also in agreement with experimental investigations. (4) Conclusions: Volatile secondary metabolites and the pure isolated compound (osthole) from the roots of P. pabularia exhibited potent antidiabetic activity, twenty-five and nearly two times more than the positive control (3-(3,5-dibromo-4-hydroxybenzoyl)-2-ethylbenzofuran-6-sulfonic acid-(4-(thiazol-2-ylsulfamyl)-phenyl)-amide)) with an IC50 value of 1.46 ± 0.4 μg/mL, respectively.