The hypoglycaemic and hypolipidemic effect of ethanolic extract obtained from seeds of E. jambolana was investigated in alloxan-induced diabetic rabbits. Hypoglycaemic activity was assessed by reduction in fasting blood glucose (FBG) at 90min and also fall in peak blood glucose during glucose tolerance test (GTT) in sub-diabetic and mild diabetic (MD) rabbits, but in severe diabetic (SD) rabbits by reduction in FBG at 90min. Ethanolic extract (100mg/kg body weight) when given orally to sub-diabetic (AR) for 1 day, MD for 7 days and SD for 15 days showed significant fall in FBG at 90min (12% AR, 18.9% MD and 29% SD) and also produced 16.9% fall in peak blood glucose in AR and 21% in MD rabbits during GTT. When administered daily for 15 days to MD and SD rabbits, significant fall in FBG (41.3% MD, 31.6% SD) and glycosylated haemoglobin (GHb) levels (23.3% MD, 26.6% SD) were observed, while serum insulin level showed significant increase (32.8% MD, 26.9% SD). Liver and muscle glycogen content also increased. The ethanolic extract of seeds also exhibited significant hypolipidemic effect as evident from fall in total serum cholesterol (TC)/high density lipoprotein cholesterol (HDL-c) ratio, serum low density lipoprotein cholesterol (LDL-c) levels and decreased activity of HMG-CoA reductase. The histopathological studies of liver, pancreas and aorta in alcoholic extract treated diabetic groups revealed almost normal appearance.