The present investigation was carried out to evaluate the effect of Phaseolus vulgaris, an indigenous plant used in Unani and Ayurvedic medicine in India, on blood glucose, plasma insulin, cholesterol, triglycerides, free fatty acids, phospholipids, and fatty acid composition of total lipids in liver, kidney, and brain of normal and streptozotocin (STZ) diabetic rats. The results show that there was a significant increase in tissue cholesterol, triglycerides, free fatty acids, and phospholipids in STZ diabetic rats. The analysis of fatty acids showed that there was a significant increase in the concentrations of palmitic acid (16:1), stearic acid (18:0), and oleic acid (18:1) in liver, kidney, and brain, whereas the concentrations of linolenic acid (18:3) and arachidonic acid (20:4) were significantly decreased. Oral administration of the aqueous extract of P. vulgaris pods (200 mg/kg of body weight) for 45 days to diabetic rats decreased the concentrations of lipids and fatty acids, viz., palmitic, stearic, and oleic acids, whereas linolenic and arachidonic acids were elevated. Similarly, the administration of P. vulgaris pod extract (PPEt) to normal animals resulted in a significant hypolipidemic effect. These results suggest that PPEt exhibits hypoglycemic and hypolipidemic effects in STZ diabetic rats. It also prevents the fatty acid changes produced during diabetes. The effect of PPEt at 200 mg/kg of body weight was better than that of glibenclamide.