Hypoglycemic effect of Tabebuia avellandae was investigated in the streptozotocin(STZ)-induced diabetic rats. Diabetes was induced in male Sprague-Dawley rats by injections of STZ (45 mg/kg, i.v.). Rats weighing 200-250 g were divided into 6 groups: normal, STZ-control, hexane fr., CHCl$_3$fr., BuOH fr. and $H_2O$ fr. group. Normal and STZ-control rats received 3% Tween 80 only. Four groups of diabetic rats were administered orally at doses of 100, 400, 300 and 400 mg/kg/day of hexane, CHC1$_3$, BuOH and $H_2O$ fr. respectively. Fractions were administered orally to the rats for 7 days after STZ injection. All rats were anesthetized with ether, blood samples were taken by cardiac puncture for clinical chemistry and the rats were killed by exsanguination. Liver, kidney, heart and spleen were removed, weighed and analyzed. We measured glucose, protein, cholesterol and triglyceride levels in the plasma and glycogen, cholesterol and triglyceride levels in liver. The extent of blood glucose decrement in rats administered $H_2O$ fraction was greater than that in the STZ-control rats. The serum cholesterol and triglyceride levels were significantly lowered by administration of $H_2O$ fraction compared with those of STZ-control group. Treatment of rats with Tabebuia avellandae fractions caused decreases in STZ-induced elevation of cholesterol and triglyceride. Liver triglyceride level was significantly lowered hexane and BuOH fraction group compared with STZ-control group. These results suggest that $H_2O$ fraction of Tabebuia avellandae has the hypoglycemic action against STZ-induced diabetic rats.