Present investigation was made to reveal the involvement of a quercetin in the antidiabetic and antiperoxidative effects of Annona squamosa leaf extract. Quercetin-3-O-glucoside (characterized by UV, IR, MS and NMR analyses) was isolated from Annona squamosa leaves and examined for its potential to regulate alloxan-induced hyperglycemia and lipid peroxidation (LPO) in rats. While in alloxan treated animals, an increase in the concentration of serum glucose with a parallel decrease in insulin level was observed, administration of 15 mg/kg/day of isolated quercetin-3-O-glucoside for 10 consecutive days to the hyperglycemic animals reversed these effects and simultaneously inhibited the activity of hepatic glucose-6-phosphatase. It further decreased the hepatic and renal LPO with a concomitant increase in the activities of antioxidative enzymes, such as catalase (CAT) and superoxide dismutase (SOD) and in glutathione (GSH) content, indicating its safe and antiperoxidative effects. These findings suggest the potential of quercetin-3-O-glucoside in the amelioration of diabetes mellitus and tissue lipid peroxidation. It also appears that the antidiabetic effects of A. squamosa leaf extract is possibly mediated through the insulin stimulating and/or free radical scavenging properties of its active constituent, quercetin-3-O-glucoside.