The CHCl₃ extract of Matteccia orientalis showed very strong hypoglycemic activity in streptozotocin (STZ)-induced diabetic rats. A new C-methyl flavanone derivative, 2'-hydroxymatteucinol (3) was isolated from the hypoglycemic activity bearing fraction, along with two known compounds, demethoxymatteucinol (1) and matteucinol (2). The structures of these isolated compounds were elucidated by spectroscopic methods. One of the compounds isolated from CHCl₃ extract, 2'-hydroxymatteucinol (3), showed dose-dependent hypoglycemic activity, and a blood sugar lowering effect was observed even at the dose of 10 mg/kg (p.o.) in STZ-induced diabetic rats.