ABSTRACT A novel antioxidant and anti inflammatory herbal composition for lowering blood glucose and cholesterol levels with water extract of herbs. The present invention contains selected herbs such as Terminalia chebula, Phyllanthus emblica, Muraya koeenigi, Tinospora cardifolia, Cyprus rotundus, Syzgium cumini and Phyllanthus amarus. The herbal extract of the present invention is prepared in atleast in one of the forms such as non-encapsulated powdered form, atleast in capsulated form or atleast in tablet form. The said herbal extract is available in dried, powdered form and is administered orally along with water. The herbal composition of the present invention has anti-diabetic, anti-adipogenic, anti-inflammatory and anti-oxidant activity.