Background: Acacia farnesiana is a medicinal plant that grows throughout tropical parts of Indian subcontinent, particularly in sandy soils of river beds in Northern India. The objective of the present study was to evaluate the anti-hyperglycemic activity of the extracts using glucose tolerance test. Isolation of an active fraction (AF) from the active extract (water extract) using alcohol precipitation and to get insight to the mechanism of action of the AF of A. farnesiana. Materials and Methods: Glucose uptake by isolated rat diaphragm of the AF was performed. Further the effect of release of Insulin from isolated and cultured pancreatic β-cell was determined. Besides, effect of oral administration of the AF was compared with that of intraperitonial administration. The effect of AF on serum glucose levels in orally glucose loaded rats was compared with that of intraperitoneal glucose loaded rats. Results: The water extract significantly lowered the blood glucose level. When precipitated with alcohol, the activity was found in the soluble fraction. Glucose uptake in the isolated rat hemidiaphragm, was increased by the AF at 40 μg/ml concentration, the AF did not significantly influence insulin release from cultured islets. The AF was found to be effective in orally glucose loaded in contrast to intraperitonial route. Conclusion: Our findings suggest that this plant is promising for further studies leading to the development of valuable medicine for diabetes.