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Azadirachta indica, Allium sativum and Annona squamosa are well-known plants available throughout India and are commonly used for the treatment of various diseases including diabetes mellitus. The antidiabetic activity of the individual plant parts is well known, but the synergistic or combined effects are unclear. Polyherbal formulations enhance the therapeutic action and reduce the concentrations of single herbs, thereby reducing adverse events. The aim of the present study is to formulate a polyherbal formulation and evaluate its antidiabetic potential in animals. The polyherbal formulation was formulated using the ethanol extracts of the leaves of Azadirachta indica, Allium sativum and Annona squamosa. The oral antidiabetic activity of the polyherbal formulation (200) was screened against alloxan and streptozotocin induced diabetes mellitus in rats. Polyherbal formulation showed significant antidiabetic activity at 200 mg/kg, respectively, and this effect was comparable with that of standard drug. The antidiabetic activity of polyherbal formulation is supported by biochemical and histopathologic analysis.