Horse gram (Macrotyloma uniflorum) is used in the traditional method for treatmentof several health complications. It is also known that fermentation of such substrates yields a number of compounds that enhance the overall activities against several disease states. Solid state fermentation of horse gram using Penicillium camemberti showed an inhibition of pancreatic lipase and alpha glucosidase activities. The fermented material, termed Kaulath, showed 60 % increase in fat content. A reduction in sodium and increased levels of potassium and calcium was observed in Kaulath. In addition, a higher free radical scavenging activity was noted in this product compared to unfermented horse gram. Antinutritional factors, such as phytic acid and trypsin inhibitors showed a reduction in Kaulath. Furthermore, Kaulath, upto 1 g per kg body weight, did not exhibit any mortality or toxic effects in experimental rats after 14 days of administration. The hematological and clinical parameters were within safe limits between the groups, supported by the histopathology of liver and kidney. These results indicate potential food use of Kaulath in diets and as functional ingredients in formulated foods.