Anti-hyperglycemic effect was observed with Tephrosia villosa Pers (Family: Fabaceae) when given as root extract in normal as well as diabetic rats. The effect, however, was more pronounced in diabetic animals in which administration for 12 days after alloxan induced diabetes, significantly reduced blood glucose levels. After alloxan induced diabetes it was observed that both standard drug (glibenclamide) and aqueous extract of Tephrosia villosa were significantly superior to control in reducing blood sugar on long treatment (12 days). The data suggested that Tephrosia villosa could be of benefit in diabetes mellitus in controlling blood sugar. The present investigation established pharmacological evidence to support the folklore claims as an anti-diabetic.