In India, Tectona grandis is traditionally used in the treatment of diabetes mellitus and lipid disorder. In the present study, the antihyperglycemic and lipid lowering effect of ethanolic extract of bark of Tectona grandis (TG) was evaluated using alloxan induced diabetes in rats. Alloxan was given at the dose of 140 mg/kg, i.p. After induction of diabetes, TG was administered for 42 days p. o. and simultaneously different biochemical parameters like plasma glucose, liver glycogen content, serum triglyceride, cholesterol, LDL-cholesterol and HDL-cholesterol were estimated. Diabetic control showed significant increase (P < 0.01) in plasma glucose, serum triglyceride, cholesterol, LDL-cholesterol and significant decrease (P < 0.01) in serum HDL-cholesterol and liver glycogen content. Treatment with TG showed significant reduction (P < 0.01) in plasma glucose when compared with diabetic control. The elevated levels of serum triglyceride and cholesterol levels were significantly reduced (P < 0.01) by TG. TG treatment for 42 days showed significant decrease in serum LDL-cholesterol (P < 0.01) and significant increase in serum HDL-cholesterol level (P < 0.01). Moreover, diabetic control there was significant decrease in liver glycogen content which was significantly increased (P < 0.05) by treatment with TG. Hence, from the result obtained in the present study it can be concluded that Tectona grandis has the potential to treat diabetes condition and associated lipid disorder.