The present study was aimed to evaluate the anti-diabetic potential of Terminalia chebula (T. chebula) fruits on streptozotocin (STZ)-induced experimental diabetes in rats. Oral administration of ethanolic extract of the fruits (200 mg/kg body weight/rat/day) for 30 days significantly reduced the levels of blood glucose and glycosylated hemoglobin in diabetic rats. Determination of plasma insulin levels revealed the insulin stimulating action of the fruit extract. Also, the alterations observed in the activities of carbohydrate and glycogen metabolising enzymes were reverted back to near normal after 30 days of treatment with the extract. Electron microscopic studies showed significant morphological changes in the mitochondria and endoplasmic reticulum of pancreatic β cells of STZ-induced diabetic rats. Also, a decrease in the number of secretory granules of β-cells was observed in the STZ-induced diabetic rats and a these pathological abnormalities were normalized after treatment with T. chebula extract. The efficacy of the fruit extract was comparable with glibenclamide, a well known hypoglycemic drug.