Mushrooms (a macrofungus) have high dietary values and are used in cooking for ages. Some of them are also reported to have medicinal properties. Volvariella volvacea (V. Volacea) is an edible mushroom cultivated in East and South East Asia. This provides good nutrition is extremely suitable in human diet. The present work was planned to determine the antidiabetic potential of V. volvacea by exploring the glucose tolerance test and other vital serum profiles in normal as well as STZ-induced diabetic rats. The mushroom was subjected to hydroalcoholic extraction; the extract was divided into two equal portions. One part was dried by lyophilisation (LE) and second part was dried in hot air oven (ODE). The LE and ODE of V. volvacea was studied for antidiabetic activity. The extracts, in a dose dependent manner could significantly decrease the serum glucose level of diabetic rats. The results show that LE of V. volvacea exhibited more antidiabetic activity than ODE. The above result advocate that more study is required to proceed for developing a formulation of this mushroom to utilise its nutraceutical and medicinal properties