The prevalence of diabetes mellitus is steadily growing throughout the world. Traditional medicine has an excellent potential in the treatment of diabetes mellitus. The present study was undertaken to evaluate the potential antidiabetic effect of peppermint essential oil (PEO) on streptozotocin (STZ) and nicotinamide induced diabetic rats. Diabetes was induced in rats fasting overnight by the intraperitoneal administration of nicotinamide followed by a single dose of STZ. After 72h, two groups of diabetic rats were treated with different doses of PEO (40 and 80mg/kg BW) respectively and one group was treated with the standard hypoglycemic agent glibenclamide. The levels of blood glucose, serum insulin, and C-peptide were estimated. The markers of oxidative stress were quantified. The samples from liver and pancreas were collected for histological evaluation. Immunohistochemical tests were carried out to determine the expression of Bcl–2 and insulin in the liver and pancreas, respectively. After the treatment with PEO, it was observed that anemia resulting from diabetes was rectified, the counts of leukocytes and platelets, which decreased during diabetes, were increased, the levels of blood glucose were decreased and those of serum insulin and C-peptide were increased. The administration of PEO also enhanced the antioxidant status in the treated rats. The histological analysis revealed regeneration of the hepatic and pancreatic tissues and the extent of degenerative changes were reduced. The immunohistochemical examination revealed upregulation in the expression of Bcl–2 and insulin. These findings demonstrated the potential antidiabetic capability of PEO.