Background: Diabetes mellitus (DM) is one of the most common non-communicable diseases impacting millions worldwide. There is immense need for cost effective and safer alternative therapies for diabetes for developing countries like India where majority of population rely on traditional medicine for their healthcare needs.Objectives: Present study was conducted to evaluate the antidiabetic effects of a compound Unani formulation (CUF) in animal models.Materials and methods: Test formulation (CUF) was prepared as per traditional method. Oral glucose tolerance test (OGTT) was performed in euglycemic normal rats to assess peripheral utilization of glucose. Nicotinamide Streptozotocin-induced Non-Insulin Dependent Diabetes Mellitus (NIDDM) model was used for evaluating anti-diabetic effect in Wistar rats. CUF (600 and 1200 mg/kg) and positive control glibenclamide (10 mg/kg) was administered orally for 28-days and blood glucose level was analyzed on 14th and 28th day. Anti-oxidant potential of CUF was also conducted using DDPH, ABTS and FRAP scavenging assay.Results: CUF markedly reduced glucose levels in OGTT in normal rats for up to 60 minutes at both dose levels. In NIDDM model, CUF demonstrated a significant reduction in fasting blood glucose level on 14th and 28th days of treatment. The formulation has shown promising antioxidant results. The results are in agreement with the ethnopharmacological use of the formulation. Conclusion: Findings of present study advocate antidiabetic potential of CUF and it may be a cost-effective and safe anti-diabetic formulation for developing world.