The objective of the present study was to evaluate hypolipidemic effect of methanolic extract of Celastrus paniculatus in experimentally induced hypercholesterolemic rats. Hypercholesterolemia was induced by feeding the animals with high fat diet. Oral administration of methanolic seed extract (50%) of Celastrus paniculatus at the optimized dose of 65 mg/kg body weight, substantially reduced the plasma total cholesterol, triglycerides and LDL cholesterol in comparison with induced hypercholesterolemic animal group and the results were comparable with the standard hypocholesterolemic drug and almost similar to the control group. Atherogenic index and liver weight of treated animals also showed significant decrease compared to the hypercholesterolemic animals. It substantially increased the HDL cholesterol level as compared to control group. A significant increase in the activities of lipoprotein lipase and plasma LCAT enhanced hepatic bile acid synthesis and thereby, increased degradation of cholesterol to neutral sterols. Furthermore, the activities of HMG-CoA reductase, glucose 6-phosphate dehydrogenase and malate dehydrogenase were significantly reduced. Histological studies showed less cholesterol deposits in the aorta of animals fed with seed extract of C. paniculatus compared to the induced hypercholesterolemic animals not given C. paniculatus supplement.