Despite many herbs having both antidiabetic as well as antiobesity activity; there is no marketed polyherbal formulation for obesity associated diabetes. In light of this, polyherbal preparation for obesity associated diabetes containing Gymnema sylvestre R., Garcinia Cambogia, Lagerstromia speciosa L., was investigated in normal and obese streptozotocin induced diabetic rats. Effect of oral administration of polyherbal formulation (412, 825 and 1625 mg/kg body weight) for 21 days on the level of serum glucose, total cholesterol, triglycerides, serum LDL, serum HDL, serum VLDL levels and body weight in obese diabetic rats were evaluated. Administration of the formulation for 21 days significantly decreased serum glucose, total cholesterol, triglycerides, LDL, VLDL levels and body weight and increased the HDL level. A comparison was made between the action of polyherbal formulation and glibenclamide (4 mg/kg), the standard antidiabetic drug, sibutramine (5mg/kg), the standard antiobesity drug. The antidiabetic and antiobesity effect of the formulation was found to be nearly similar to that observed for glibenclamide and sibutramine respectively. It ican be concluded that, the formulation should be considered as an excellent candidate for future studies of obesity associated diabetes.