Objective: To evaluate the anti-hyperglycemic activity of water extract of Psidium guajava stem bark. Materials and methods: The water extract of stem bark of Psidium guajava was tested for its hypoglycemic activity in normal glucose loaded and alloxan-induced hyperglycemic Wistar rats. Blood glucose levels were evaluated at intervals of 30 and 90 minutes in normal glucose loaded animals, at intervals of 0, 1 and 3 h in acute study and at days 1, 3, 7 and 10 during sub acute treatment after extract administration at an oral dose of 250 mg/kg. Results: During both acute and sub-acute tests, the water extract showed statistically significant and considerable anti-hyperglycemic activity and enhanced glucose tolerance in normal glucose loaded rats. Conclusion: Psidium guajava stem bark possessed statistically significant anti-hyperglycemic potential in alloxan induced diabetic rats and enhanced glucose tolerance in glucose loaded normal rats.