Diabetes is often accompanied by metabolic alterations , which contribute significantly to morbidity and mortality in diabetic subjects .Olive leaves extract (OLE) are used in traditional medicine as hypoglycemic agent in many Arab countries. To examine the beneficial effect of OLE, it was administered in drinking water of alloxan induced diabetic rats at 3% and 6% concentrations.Blood glucose level decreased significantly (P<0.05) from 135.6±12.2 mg/dl in the control group to 48.3±2.73 and 64.8±14.62 mg/dl in 3% and 6% treated groups respectively .The concentrations of cholesterol, triglycerides, total proteins and albumin were improved by the administration of OLE.The activities of liver enzymes , Alanine aminotransaminase(ALT,), Aspartate aminotransaminase,AST) were elevated in diabetic rats, however , administration of OLE reduced the activities of these enzymes.The activity of AST was significantly reduced from 204.7±13.2 IU/L in the positive control to 109.3±11.0 and 130.2±16.0 IU/L in 3% and 6% OLE respectively and the activity of ALT was also reduced significantly from 48.0±9.2 IU/L in the positive control to 24.7±10.4 ,34.8±6.2 IU/L in 3% and 6% OLErespectively.In the brain,Cellular changes were noticed in untreated diabetic rats including generalizedand localized edema in the white matter of the cerebrum and cerebellum. Diabetes induced neuronal degeneration; neuronal necrosis, neuronal chromatolysis and axonal demylenation. All these changeswere improved by OLE administration.It can be concluded that OLE is having hypoglycemic effect, Neuroprotective activity and improves changes associated with diabetes probably due to the many potentially bioactive compounds it contain.