Abstract: The aim of this present study was to determine the probable mechanism of action of Aegle marmelos plant leaf extract on streptozotocin induced diabetic mice for the treatment of diabetes mellitus. Once the diabetic condition was achieved after injecting the mice with 60 mg kg-1 body weight (b.wt.) of streptozotocin, the mice were treated for another 15 days with aqueous extract of leaves. Data showed that 300 mg kg-1 b.wt. of extract was most effective in reverting the diabetic mice to normal condition. Different biochemical parameters like glucose tolerance test, lipid profile, glycogen biosynthesis, glucose uptake, differential regulation of glucose homeostatic enzymes like glucose-6-phosphatase, hexokinase and insulin release in vitro, clearly demonstrated the hypoglycemic effect in treated animals. The data showed that this plant’s leaf extract has a remarkable hypoglycemic and hypolipidemic effects. Further study is needed to isolate the active principles from this plant and understand its molecular mechanism of action.