Peel is a major by-product during processing of mango fruit into pulp. Recent report indicates that the whole peel powder ameliorated diabetes. In the present study, ethanolic extract of mango peel was analysed for its bioactive compounds, evaluated for α-amylase and α-glucosidase inhibitory properties, oral glucose tolerance test, antioxidant properties, plasma insulin level and biochemical parameters related to diabetes. In addition to gallic and protocatechuic acids, the extract also had chlorogenic and ferulic acids, which were not reported earlier in mango peel extracts. The peel extract inhibited α-amylase and α-glucosidase activities, with IC50 values of 4.0 and 3.5μg/ml. Ethanolic extract of peel showed better glucose utilization in oral glucose tolerance test. Treatment of streptozotocin-induced diabetic rats with the extract decreased fasting blood glucose, fructosamine and glycated hemoglobin levels, and increased plasma insulin level. Peel extract treatment decreased malondialdehyde level, but increased the activities of antioxidant enzymes significantly in liver and kidney compared to diabetic rats. These beneficial effects were comparable to metformin, but better than gallic acid treated diabetic rats. The beneficial effects of peel extract may be through different mechanism like increased plasma insulin levels, decreased oxidative stress and inhibition of carbohydrate hydrolyzing enzyme activities by its bioactive compounds. Thus, results suggestthat the peel extract can be a potential source of nutraceutical or can be used in functional foods and this is the first report on antidiabetic properties of mango peel extract.