There has been an enormous interest in the development of alternative medicines for type 2 diabetes, specifically screening for phytochemicals with the ability to delay or prevent glucose absorption. The goal of the present study was to provide in vitro evidence for potential inhibition of alpha-glucosidase and alpha-amylase enzymes, followed by a confirmatory in vivo study on rats to generate a stronger biochemical rationale for further studies on the ethanolic extract of Andrographis paniculata and andrographolide. The extract showed appreciable alpha-glucosidase inhibitory effect in a concentration-dependent manner (IC(50)=17.2+/-0.15 mg/ml) and a weak alpha-amylase inhibitory activity (IC(50)=50.9+/-0.17 mg/ml). Andrographolide demonstrated a similar (IC(50)=11.0+/-0.28 mg/ml) alpha-glucosidase and alpha-amylase inhibitory activity (IC(50)=11.3+/-0.29 mg/ml). The positive in vitro enzyme inhibition tests paved way for confirmatory in vivo studies. The in vivo studies demonstrated that A. paniculata extract significantly (P<0.05) reduced peak blood glucose and area under curve in diabetic rats when challenged with oral administration of starch and sucrose. Further, andrographolide also caused a significant (P<0.05) reduction in peak blood glucose and area under the curve in diabetic rats. Hence alpha-glucosidase inhibition may possibly be one of the mechanisms for the A. paniculata extract to exert antidiabetic activity and indicates that AP extract can be considered as a potential candidate for the management of type 2 diabetes mellitus.