A surfactant-free environmentally friendly approach for synthesising silver nanoparticles using Curcuma amada rhizome essential oil has been demonstrated. The composition and structure of silver nanoparticles are analysed using transmission electron microscopy, UV–visible spectroscopy, and Fourier transform infrared spectroscopy. The identification of a surface plasmon band at 428 nm by UV–visible spectroscopy provides preliminary evidence for the formation of silver nanoparticles. The transmission electron microscope verifies that the silver nanoparticles have an average particle size of 12.4 nm confirming a spherical shape. Self-stabilization of silver nanoparticles is discussed and correlated with the in-situ grafting of oil functional groups on surface nanoparticles. In-vitro and in-vivo antidiabetic studies are done for silver nanoparticles considering their antidiabetic potential, low toxicity, and the presence of curcumin functionalities on their surface. Specifically, the in-vitro study is done with α-amylase assay and in-vivo antidiabetic studies are done with streptozotocin-induceddiabetic rats. The percentage inhibition of α-amylase assay by silver nanoparticles is found concentration (20 μl–100 μl) dependent. The best result is seen at 100 μl concentration of silver nanoparticles (72 % inhibition) which is near to the standard taken (acarbose, 78 % inhibition). In-vivo study, the toxicity of two doses of Curcuma amada rhizome essential oil (200 mg/kg and 400 mg/kg) and synthesized silver nanoparticles (5 and 10 mg/kg) is checked and it is found safe. During the invivo study, silver nanoparticles with a dose of 5 mg/kg are capable of lowering the blood glucose level of all the streptozotocin-induced diabetic rats within 21 days (range ∼340–120 mg/dL). The histopathological analysis also supported the fact that there is an improvement in the pancreatic β-cells of all the diabetic groups compared to control group.