Objective: To assess the antidiabetic and hypolipidemic properties of Lippia nodiflora (L. nodiflora).Methods:Acute toxicity test was done to check the toxicity of L. nodiflora methanol extract and oral glucose tolerance test was performed in normal rats. L. nodiflora methanol extract at three dose levels was administerd orally to streptozotocin (STZ) (40mg/kg bw) induced diabetic rats for 15 days. The various parameters were studied including body weight, fasting blood glucose levels, plasma insulin, lipid profile, glycogen content, glycoslylated hemoglobin (HbA1c) and serum marker enzyme levels in normal, treated and diabetic rats. Histochemical analysis of pancreas was also carried out in normal, treated and diabetic rats. Results: The treatment group with the extract at three dose levels showed a significant increase in the liver, muscle glycogen and serum insulin level and a significant decrease in fasting blood glucose, glycosylated hemoglobin levels and serum marker enzyme levels. The total cholesterol and serum triglycerides levels were also significantly reduced and the high density lipoprotein level was significantly increased upon treatment with the L. nodiflora methanol extract. Histochemical study of pancreas also confirmed the biochemical findings. Acute toxicity studies revealed the non-toxic nature of the L. nodiflora methanol extract. Conclusions: The results of the experiments presented here suggest that methanol extract of L. nodiflora exerts significant antidiabetic and hypolipidaemic effect in STZ-induced diabetic rats.