The present study describes the antidiabetic effect of the flavonoid rich fraction of Pilea microphylla (PM1). HPLC characterization of PM1 revealed the presence of polyphenols viz., chlorogenic acid, rutin, luteolin-7-O-glucoside, isorhoifolin, apigenin-7-O-glucoside, and quercetin. PM1 inhibited dipeptidyl peptidase IV (DPP-IV) in vitro with an IC₅₀ of 520.4 ± 15.4 _g/ml. PM1, at doses of 300, 600 and 900 mg/kg i.p., also produced dose-dependent mean percent reductions of 9.9, 30.6 and 41.0 in glucose excursion (AUC_{0–120 min}) respectively in lean mice. However, even the highest dose of PM1 did not alter normoglycemic condition. PM1 at dose of 100 mg/kg/day, i.p. for 28 days produced significant (p < 0.05) reduction in body weight, plasma glucose (PG), triglycerides (TG) and total cholesterol (TC) content in high-fat streptozotocin-induced diabetic mice. PM1 also improved oral glucose tolerance significantly (p < 0.05) with mean percentage reduction of 48.0% in glucose excursion (AUC_{0–120 min}) and significantly (p < 0.05) enhanced the endogenous antioxidant status in mice liver compared to diabetic control. PM1 preserved islet architecture and prevented hypertrophy of hepatocytes as evident from the histopathology of pancreas and liver. PM1 did not show any detectable hematological toxicity at therapeutic doses. In conclusion, PM1 exhibits antidiabetic effect possibly by inhibiting DPP-IV and improving antioxidant levels in high fat diet/streptozotocin (HFD/STZ) diabetic mice.