Inhibition of intestinal alpha glucosidase plays a major role in preventing rise in postprandial glucose level in diabetics. Cymbopogon martinii (CM) (family Poaceae) is used in traditional Indian medicine in treatment of diabetes mellitus. The alpha glucosidase inhibitory action of the plant is studied. The active component was separated using hot water extraction of the whole plant powder, differential solvent extraction, and silica gel column chromatography. The 30 : 70 toluene : ethyl acetate fraction showed optimum activity. The silica gel chromatography fraction demonstrated 98, 98, and 68% inhibition for starch, maltose, and sucrose, respectively, at 5 mg/kg body weight of rats. Intestinal absorption studies using noneverted intestinal sacs, as well as in vivo studies in streptozotocin-induced diabetic rats using oral glucose tolerance with maltose and sucrose load, revealed better inhibition of alpha glucosidase as compared to acarbose. Kinetic studies using Lineweaver Burk plot showed mixed to noncompetitive type of inhibition by CM. In vivo studies with maltose load of 2 mg and 3 mg/gm body weight showed a noncompetitive pattern of inhibition at 5 mg/kg body weight of CM as against 60 mg/kg body weight of acarbose. Thus CM is more effective alpha glucosidase inhibitor and at lower concentration than acarbose.