We measured a vast range of parameters, in an attempt to further elucidate previously claimed antihyperglycemic activity of Butea monosperma. Our study clearly negates the possibility of antidiabetic activity by inhibited gastrointestinal enzyme action or by reduced glucose absorption. Reduction of fasting and postprandial glucose level was reconfirmed (P < 0.05). Improved serum lipid profile via reduced low density lipoprotein (LDL), cholesterol, triglycerides (TG), and increased high density lipoprotein (HDL) was also reestablished (P < 0.05). Significant insulin secretagogue activity of B. monosperma was found in serum insulin assay of B. monosperma treated type 2 diabetic rats (P < 0.01). This was further ascertained by our study on insulin secretion on isolated rat islets (P < 0.05). Improved sensitivity of glucose was shown by the significant increase in hepatic glycogen deposition (P < 0.05). Hence, we concluded that antihyperglycemic activity of B. monosperma was mediated by enhanced insulin secretion and enhanced glycogen formation in the liver.