Withania coagulans is an Indian medicinal herb, the natural extracts of which are purported to have health-benefiting properties. In this study, the extract was encapsulated in nature-derived polymers with the aim of enhancing its bioavailability. The aqueous extract obtained from the plant W. coagulans was found to elicit the glucose-lowering effect by means of promoting insulin secretion from pancreatic β cells. The cells treated with the extract showed a nearly 2-fold increase in insulin secretion compared to untreated cells. A delivery system for the extract was developed based on electrosprayed chitosan nanoparticles coated with food-based starch. The enteric starch coating retarded (by 2.5 times) the release of the extract in the stomach. The bioactivity of the encapsulated extract was subsequently tested in vitro on mouse-derived pancreatic β cells, whereby the delivery system was found to promote insulin secretion. Finally, the extract-encapsulated oral delivery system was tested on diabetic mice and was validated to decrease blood glucose levels by 60%. In summary, it could be inferred that food-grade enteric-coated polysaccharide-based particles increase the bioavailability of the extracted compounds from the plant W. coagulans.