Conventional drugs treat diabetes by improving insulin sensitivity, increasing insulin production and/or decreasing the amount of glucose in blood. Several herbal preparations are used to treat diabetes, but their reported hypoglycemic effects are complex or even paradoxical in some cases. This article reviews recent findings about some of the most popular hypoglycemic herbs, such as ginseng, bitter melon and Coptis chinensis. Several popular commercially available herbal preparations are also discussed, including ADHF (anti-diabetes herbal formulation), Jiangtangkeli, YGD (Yerbe Mate-Guarana-Damiana) and BN (Byakko-ka-ninjin-to). The efficacy of hypoglycemic herbs is achieved by increasing insulin secretion, enhancing glucose uptake by adipose and muscle tissues, inhibiting glucose absorption from intestine and inhibiting glucose production from heptocytes.