One potential solution to enhance the nutritional value of food while addressing environmental concerns is to use bioactive extracts from agro-waste in the food industry. This study aimed to investigate the effects of replacing sucrose with powders made from Stevia leaves (SLP), banana peels (BPP), and carrot leaves (CLP), as well as their mixtures, in cupcakes. Additionally, the study aimed to determine the impact of these substitutes on alloxan-induced diabetic rats fed the cupcakes. Sensory evaluation revealed that up to 60% of sucrose in the cupcake formula could be replaced without significant changes in sensory attributes. Substituting agro-wastes and SLP increased the protein content from 12.86% to 14.26% and the dietary fiber content from 3.65% to 5.60% compared to the control sample. The treated diabetic groups, particularly those fed cupcakes containing SLP-CLP mixture, showed increased body weight gain % and feed intake, reducing serum glucose levels from 427.5 to 180.8 mg/dL after 28 days. The mix of CLP-SLP had the highest additive effect, indicating a significant reduction in various biochemical parameters, including ALT, AST, albumin, urea, uric acid, creatinine, total cholesterol, triglyceride, and LDL, compared to the positive control. No histopathological alterations were detected in the pancreas and liver of diabetic rats fed cupcakes supplemented with SLP-CLP. However, moderate degenerations were observed in the hepatocytes of diabetic rats fed cupcakes fortified with SLP-BPP.