Medicinal plants are reservoirs of natural products with anti-diabetic potentials. In the present study we screened Costus afer for the presence of plant products and to study the effects of the aqueous stem extract of the plant on fasting blood glucose of streptozotocin induced diabetic male rats. Adult male wistar strain albino rats were given graded doses (500, 1000 and 1500 mg/kg) of the aqueous stem extract of Costus afer, and astandard hypoglycemic drug metformin was co-administered with 500mg/kg of the plant extract for a period of 3, 6 and 9 weeks. The statistical analysis was carried out using one way ANOVA followed by post hoc LSD multiple comparison on SPSS 19. Costus afer showed significant hypoglycemic effect (p<0.05) comparable with the with glucose level of the normal control rats. Also, a combination of plant extract and metformin caused a significant reduction in fasting blood sugar of the streptozotocin induced diabetic rats. In histological evaluation of the pancreas, the islet cells of the Langerhan of the pancreas were repopulated and preserved in all the groups treated with the plant extract and its combination with metformin against the diabetic control group whose islet cells were reduced. The results validate the use of Costus afer as a hypoglycemic plant in native medicine. Costus afercould be a promising plant for the development of anti-diabetic drugs.