Objective: To evaluate the antidiabetic and antioxidant effects of aqueous ethanolic extract of Caesalpinia ferrea (C. ferrea) leaf in normal and streptozotocin (STZ) induced diabetic rats. Methods: Male Sprague-Dawley rats divided into 6 groups of 6 rats each were assigned into diabetic and non-diabetic groups. Diabetes was induced in rats by single intraperitoneal administration of STZ (65 mg/kg body weight). C. ferrea extract at the doses of 250 and 500 mg/kg body weight was orally administered to both diabetic and nondiabetic animals for a period of 30 days. After completion of experimental duration serum, liver and pancreas were used for evaluating biochemical and histopathological changes. Results: Oral administration of C. ferrea leaf extract significantly reduced elevated serum glucose, α-amylase, liver function levels and significantly increased serum insulin, total protein and body weight as well as improved lipid profile due to diabetes. Furthermore, the treatment resulted in a marked increase in glutathione peroxidase, superoxide dismutase, catalase and reduced glutathione, and diminished levels of lipid peroxidation in liver and pancreas of diabetic rats. Histopathological studies demonstrated the reduction in the pancreas and liver damage and confirmed the biochemical findings. Conclusions: From the present study, it can be concluded that the C. ferrea leaf extract effectively improved hyperglycaemia while inhibiting the progression of oxidative stress in STZ-induced diabetic rats. Hence, it can be used in the management of diabetes mellitus.