Epilobium angustifolium (EA) is well known as a traditional medicinal plant in many countries with multiple health effects. However, the chemical composition and anti-diabetic effect of EA has not been reported. In our study, the composition and anti-diabetic effects of ethanol extracts from EA in vivo and in streptozotocin (STZ)-induced type II diabetic rats were investigated. EA ethanol extracts exhibited protection effect on H2O2 induced oxidative stress damage INS-1 cells, reduce the body weight loss, blood glucose level and increase insulin level when compared with those of diabetic rats. Following 21 days of EA treatment at 9.2 and 18.4mg/kg, BW increased by 15.85% and 15.53%, respectively, which were extremely higher than diabetic group (9.50%). The fasting blood glucose level of EA 9.2mg/kg group rats significantly decreased by 60.43% and insulin level increased by 2.78 times, respectively. Corresponding to that, the fasting blood glucose level of EA 18.4mg/kg group rats decreased by 52.61% and insulin level increased by 2 times, respectively. Collectively our data suggest that ethanol extract of EA has remarkably hypoglycemic effect in type 2 diabetes and EA might be a promising functional food or medicine for T2DM treatment.