Diabetes is a chronic metabolic disorder affecting a vast number of people worldwide. Oxidative stress is the causative agent amplifying diabetic complications in various organs by generating noxious amount of free radicals. A huge interest always exists in exploring nutraceuticals from plant materials to replace synthetic drugs in order to overcome their adverse effects and also for economic reasons. The anti-diabetic efficiency of a medicinal plant, Tinospora cordifolia (TC) was studied in experimentally induced type 2 diabetes in Sprague-Dawley rats. Diabetes was induced by a combination of high fat diet (HFD) for a period of 10 weeks followed by intraperitoneal injection of streptozotocin (STZ, 35 mg/kg of body weight). Oral treatment of TC (100 and 200 mg/kg body weight) for 14 days regulated blood glucose, provoked insulin secretion and also suppressed oxidative stress marker, thiobarbituric acid reactive substances (TBARS), formation and restored cellular defence anti-oxidant markers including superoxide dismutase (SOD), glutathione peroxidase (GPx) and glutathione (GSH), in liver. Treatment with TC (100 and 200 mg/kg) also inhibited glucose 6-phosphatase and fructose 1,6-diphosphatase (p < 0.001); and restored glycogen content in liver (p < 0.005), which was also studied by histopathological staining with periodic acid-Schiff stain. In conclusion, the traditional plant Tinospora cordifolia mediates its anti-diabetic potential through mitigating oxidative stress, promoting insulin secretion and also by inhibiting gluconeogenesis and glycogenolysis, thereby regulating blood glucose.