Seabuckthorn (Hippophae rhamnoides L.) is a branched deciduous shrub native to Europe and Asia. The plant has been used extensively in oriental traditional system of medicine for treatment of different diseases. Seabuckthorn is found to have significant antioxidative, antimicrobial, immunomodulatory, cytoprotective, hepatoprtective and tissue regenerative properties. The present study was undertaken to evaluate the antidiabetic and antioxidant effect of seabuckthorn (Hippophae rhamnoides L.) in streptozotocin-nicotinamide induced type-2 diabetic rats. Experimental diabetes was induced by a single intraperitonial injection of streptozotocin (60 mg/kg), 15 minutes after the i.p. administration of 120mg/kg nicotinamide. Seabuckthorn was administered orally to streptozotocin (STZ) diabetic rats. Blood glucose, tissue glutathione (GSH) and thiobarbituric acid reactive substances (TBARS) in pancreas were estimated following the established procedures. Biochemical observations were supplemented with histological examination of pancreatic tissue. The increase of blood glucose, TBARS level with reduction in GSH content were the salient features observed in STZ- diabetic rats. Sea buckthorn produced a significant (p< 0.05) reduction in blood glucose levels and TBARS levels in the STZ- diabetic rats. GSH, reduced significantly (p< 0.05) in diabetic rats, was brought back to near normal levels by co-administration of sea buckthorn. Degenerative changes of pancreatic beta cells in STZ- diabetic rats were minimized to near normal morphology by administration of sea buckthorn as evident by histopathological examination. The results of the study indicate the role of oxidative stress in the induction of diabetes and suggest a protective effect of sea buckthorn in this animal model.