Embelin is a natural compound possessing a plethora of pharmacological activities, including antidiabetic activity. When formulated as niosomes, embelin offers additional advantages of nanoformulations and can be further exploited for clinical use. An oral niosome formulation of embelin was developed using a thin-film hydration technique, and its antidiabetic activity was studied. The formulation was characterized in terms of entrapment efficiency, vesicle size and morphology, in vitro release profile, and stability. Antidiabetic evaluation was performed in streptozotocin (STZ)-induced diabetic Wistar rats. An antioxidant assay was carried out by evaluating superoxide dismutase (SOD), catalase (CAT), thiobarbituric acid reactive substances (TBARS), and glutathione (GSH). The optimized formulation showed a significant hypoglycemic effect, which was comparable with that of repaglinide. Moreover, significant increases in SOD, CAT, and GSH, along with a decrease in the lipid peroxidation level, were observed, which confirmed the antioxidant efficacy of the formulation. Thus, it is evident that the embelin-loaded niosome formulation was efficacious in diabetes management in Wistar rats.