"Diabetes mellitus is a metabolic disorder which may be induced by oxidative stress exhibiting the beta cell destruction. The present study is to evaluate protective effect of three extracts (methanol, ethyl acetate and decoction) of AquilariamicrocarpaBaill in order to scavenge free radical as well as decrease blood glucose level. Free radical scavenging activity was assayed by using the 2,2-diphenyl-1- picrylhydrazyl. Total flavonoids and phenolics contents was also investigated. Hypoglycemic potential was evaluated in alloxan induced diabetic rats for 14 days and measured by mainly estimating pre– and postprandial blood glucose and glycogen liver levels. All extracts significantly (p<0.05) decreased pre– and postprandial blood glucose levels as well as increased glycogen liver level. Antioxidant study of three extracts revealed that they have antioxidant property. Methanol extract revealed the highest antioxidant capacity (IC50value) as well as total phenol content while the highest total flavonoid content was ethyl acetate extract. Thus, from this study we can conclude that all extract possess antioxidant and hypoglygemic effects"