Diabetes is often accompanied by lipid abnormalities, which contribute significantly to cardiovascular morbidity and mortality in diabetic patients. Previously, we have demonstrated potent hypoglycemic activity of lyophilized aqueous extract of Murraya koenigii leaves in normal and alloxan induced diabetic rabbits for short duration of 6 h. In this study, we examined the effect of 1 month oral administration of Murraya koenigii aqueous leaves extract in normal and STZ induced severe diabetic rats, at the dose of 300 mg/kg bw, on various biochemical parameters, viz., fasting blood glucose (FBG), total cholesterol (TC), HDL-cholesterol (HDL), triglyceride (TG), alkaline phosphatase (ALKP), serum glutamate oxaloacetate and pyruvate transaminases (SGOT and SGPT) and serum creatinine. In case of diabetic animals fasting blood glucose (FBG) levels of treated animals reduced by 48.2% after 30 days treatment with the aqueous leaves extract. A fall of 19.2 and 30.8% in TC and 22.97 and 37.1% in TG levels were also observed in the case of treated normal as well as diabetic rats, respectively. Feeding the extract increased the HDL-cholesterol level by 16 and 29.4% in normal and diabetic rats, respectively, as compared with their initial values. In the normal rats after 1 month of oral administration of the extract SGOT and SGPT levels were decreased by 21.7 and 25.0%. Serum alkaline phosphatase values of the treated normal animals were also reduced by 33% while negligible change was observed in the normal control animals. In the case of diabetic rats, SGOT and SGPT levels were reduced by 36.7 and 32.2%, respectively, whereas ALKP levels decreased by 39.7% after 1 month oral administration of the extract. The serum creatinine levels decrease in normal as well as in the diabetic animals by 17.75 and 18.2%, respectively, as compared to initial values. In the diabetic control animals the urinary sugar remains at +4 level but there was a decrease of 75% in urine sugar in the case of treated diabetic rats. This indicates that the aqueous extract of Murraya koenigii has favorable effect in bringing down the severity of diabetes.