The plant Fagonia indica is used in treating various diseases in folkloric/traditional medicinal system. It is used as a folklore medicine to treat diabetes. No study has been conducted so for to determine α-amylase inhibition for the evaluation of hypoglycemic potential of the plant. So, the aim of this study was for the investigation of in vitro, in vivo anti-diabetic potential and mode of action of various fractions of methanolic extract of the aerial parts of this plant. Various fractions (n-hexane, chloroform, ethyl acetate and n-butanol) from the most active methanolic extract were prepared. Hypoglycemic potential was investigated by α-amylase inhibitory assay. Different concentrations of fractions (20-100 µg/ml) were subjected to in vitro α-amylase inhibitory assay. Assessment of anti-hyperglycemic potential of the most active chloroform fraction exhibiting in vitro α-amylase inhibition was carried out in Wistar albino rat models. Changes in postprandial levels of blood glucose in rat models (normal and diabetic) were examined after starch load with or without chloroform fraction. Chloroform fractions (250 mg/kg and 500 mg/kg b.w.) dose levels were administered to the rats and the samples of blood were taken at 0 h, 0.5 h, 1 h, 2 h and 3 h intervals. In vitro results showed that chloroform fraction at concentration of 100 µg/ml showed maximum α-amylase inhibition (53.11 ± 0.97% with IC50 value of 93.61 ± 4.44 µg/ml) followed by ethyl acetate, n-hexane and n-butanol fractions. The reference standard acarbose (100 µg/ml) showed α-amylase inhibition (68.91 ± 3.09% with IC50 value of 52.99 ± 4.88 µg/ml). In in vivo study, chloroform fractions decreased lesser postprandial blood glucose levels than the standard acarbose at half an hour after meal intake. Chloroform fraction may inhibit hydrolyzing of starch via pancreatic α-amylase. It is concluded that chloroform fraction may have therapeutic potential to prevent prophylactically diabetes type 2.