The effect of the aqueous extract of Retama raetam (RR) on blood glucose levels was investigated in fasting normal and streptozotocin-induced diabetic rats after single and repeated oral administration. The aqueous extract of RR at a dose of 20mg/kg significantly reduced the blood glucose in normal rats 6h after a single oral administration (P<0.005) and two weeks after repeated oral administration (P<0.05). This hypoglycaemic effect is more pronounced in streptozotocin (STZ) diabetic rats (P<0.001). The aqueous extract of RR had no effect on basal plasma insulin levels indicating that the underlying mechanism of RR activity is extra-pancreatic. These findings suggest that the aqueous extract of RR possess significant hypoglycaemic effect in both normal and STZ diabetic rats.