Diabetes is often accompanied by lipid abnormalities, which contribute significantly to cardiovascular (CV) morbidity and mortality in diabetic patients. The plant Ajuga iva (L.) Schreiber (Labiatea) is used in the treatment of diabetes in Moroccan folk medicine. Previously, we have demonstrated potent hypoglycemic activity and relatively non-toxic nature of a lyophilized aqueous extract of the whole plant (AI-extract) in normal (normoglycemic) and streptozotocin (STZ)-diabetic rats. In this study, we examined the AI-extract for its possible lipid-lowering activity in normal and STZ-diabetic rats. Taurine (TR) and glibenclamide (GLB) were used as reference substances. As shown previously, the AI-extract (10 mg/kg; oral) reduced plasma glucose levels after acute (single) and sub-chronic (3 weeks) dosing both in normal and diabetic rats. In normal rats, single and repeated oral administration of the AI-extract, at a dose of 10 mg/kg produced a small but significant decrease in plasma CHL levels (P<0.05). A single dose of the AI-extract did not produce a significant change in plasma TG, but sub-chronic dosing (for up to 21 days) caused a significant decrease in plasma TG (P<0.05). In STZ-diabetic rats, a single dose as well as repeated (3 weeks) treatment with the AI-extract produced a significant decrease in plasma CHL (P<0.01), and triglyceride (P<0.01) levels. The AI-extract also prevented weight loss in the diabetic animals. In summary, an aqueous extract of the Ajuga iva whole plant showed hypolipidemic activity, in addition to its hypoglycemic effect in normoglycemic and diabetic rats. In view of the hypoglycemic and hypolipidemic activity, and its relatively non-toxic nature (shown previously), Ajuga iva may be a candidate for development as an anti-diabetic agent in humans. Further studies are warranted to confirm our results and fractionate the AI-extract to isolate and identify the active principle(s), and to determine the exact mechanism(s) of action.