Katakakhadirādi Kaṣāyaṃ is an Ayurvedic herbal preparation used for treating diseases such as diabetes, skin, and urinary tract ailments. The objective of present study was to assess antidiabetic potential of Kataka Khadirādi Kaṣhāyaṃ, in Streptozotocin (STZ) induced diabetic Wistar rats for a period of 90 days. Treatment with Katakakhadirādi Kaṣhāyaṃ demonstrated significant efficacy, reducing blood glucose levels to near normal by the 5th week in diabetic rats, showing a 58% reduction compared to day 1 and a 47% reduction in comparison to the diabetic control group's blood glucose levels. However from 7th week onwards, a marked elevation was observed in blood sugar levels of all diabetic rats. Katakakhadirādi Kaṣāyaṃ treatment resulted in 35% reduction in blood level glucose values when compared to that of diabetic control group in 13th week. Hence it can be inferred that, Kaṣāyaṃ had maintained notable hypoglycemic activity despite insulin resistance. Kaṣāyaṃ treatment shows protective nature on liver tissues by reducing the increased levels of serum ALT, AST and ALP. Also it significantly reduced TG levels with a marked reduction in TC, HDL and LDL values. Histological examination also revealed mild to moderate reduction in degenerative changes of liver and kidney tissues and marked regeneration of islet architecture in pancreatic tissues. Katakakhadirādi Kaṣāyaṃ might be able to control the pancreatic beta-cell damage and has hypoglycemic, hypolipidemic and organ protective potential in STZ -induced diabetic rats. Mechanisms of action during insulin resistance is yet to be explored.