Diabetes mellitus is metabolic syndrome that causes disability, early death, and many other complications. Currently insulin and many synthetic drugs are used in diabetes treatment. However, these pharmaceutical drugs are too expensive particularly for sub-Saharan population in addition to their undesirable side effects. The present study was aimed to evaluate antidiabetic effect and toxicity level of Artemisia afra which was collected from its natural habitat in Bale Zone, around Goba town, 455 km southeast of Addis Ababa. Air dried aerial parts of Artemisia afra were separately extracted with both distilled water and 95% methanol. Oral acute toxicity test was conducted on healthy Swiss albino mice. Antidiabetic effect of the aqueous and methanolic extracts of Artemisia afra was separately evaluated on alloxan induced diabetic mice at doses of 500, 750, and 1000 mg/Kg body weight orally. The results indicate that mean lethal dose (LD50) for aqueous extract of Artemisia afra was 9833.4 mg/Kg. Blood glucose level was significantly decreased by 24% (p < 0.005) and 56.9% (p < 0.0004) in groups that received aqueous extract of Artemisia afra at dose of 500 mg/Kg and 750 mg/Kg, respectively. The methanolic extract of Artemisia afra also significantly lowered blood glucose by 49.8% (p < 0.0001) at doses of 1000 mg/kg on the 5th hr. Aqueous extract of Artemisia afra was regarded as nontoxic and safe since its LD50 was found above 5000 mg/Kg. Aqueous extract showed higher effect at relatively lower dose as compared to methanolic extract. The aqueous extract was screened positive for phytochemicals like flavonoids, polyphenols, and tannins that were reported to have antioxidant activity.