The present study investigates the effect of Diakyur, a polyherbal formulation composed of powder of Cassia javanica and dried, standardised aqueous extracts of Cassia auriculata, Salacia reticulata, Gymnema sylvestre, Mucuna pruriens, Syzygium jambolanum, Terminalia arjuna on blood glucose level of normal and diabetic animals as well as lipid peroxide level in normal and 28 day drug treated diabetic rats. The raw materials and the formulation were standardised by high performance thin layer chromatography (HPTLC) and high pressure liquid chromatography (HPLC) method of analysis. The hypoglycemic activity and glucose tolerance test were studied in normal and alloxan (150 mg/kg, i.p) induced diabetic rats and rabbits after administration of Diakyur at the dose of 1600 mg/kg, p.o. Blood glucose level was determined by O-toluidine method. Lipid peroxide levels of plasma, erythrocyte membrane, liver and kidney tissues were studied in alloxan induced diabetic rats after 28 days drug treatment. At the dose of 1600 mg/kg, p.o Diakyur showed a hypoglycemic effect at varying degree of significance (p < 0.05-0.001) in normal as well as alloxan induced diabetic rats and rabbits in comparison with respective control groups. Diakyur treatment in the glucose tolerance test showed the maximum effect at 180th min of glucose administration in both normal and alloxan diabetic animals. The drug treated alloxan diabetic rats showed significant ( p < 0.001) reduction in plasma, erythrocyte membrane, liver and kidney lipid per- * To whom correspondence should be addressed: R&D, Amrutanjan Limited, #103 Luz Church Road, Mylapore, Chennai 600 004, T. N., India. Tel.: +91-44-24994465; Fax: +91-44-24994585; E-mail: v4csj@rediffmail.com oxide levels after 28 days treatment when compared to untreated alloxan diabetic rats. The results indicate the significant hypoglycemic activity of Diakyur in both rats and rabbits, whereas an antilipidperoxidative activity in diabetic rats.