Chaetomorpha antennina is a marine green alga found abundantly on the southern coast of India. This study explores the efficacy of C. antennina extracts in the management of diabetes using in vitro and in vivo models. The algal metabolites were extracted using various solvents and evaluated for inhibitory effect against key metabolic enzymes involved in blood sugar management and antioxidant property. Among the various extracts, methanolic extract of C. antennina (MECA) was found to be effective in all the inhibitory assays including, α-amylase (IC50 525.8 μg mL−1), α-glucosidase (IC50 121.3 μg mL−1), DPP-IV (IC50 24.92 μg mL−1) and antioxidant activity using DPPH (38 %) under in vitro conditions. In toxicity assays, MECA was nontoxic against mouse macrophage cells (J774) and red blood cells. Further, in vivo studies of MECA (250 mg kg−1 B.wt) on streptozotocin (STZ)-induced diabetic rats for a period of 28 days reduced the fasting blood glucose level to 39.97 % and that of positive control glibenclamide (0.25 mg kg−1 B.wt) was 73.05 % respectively. Serum cholesterol, triglycerides, ALT and AST were significantly decreased after 28 days of MECA treatment. GC-MS analysis of MECA showed the presence of ascorbic acid, octadecadienoate and fucosterol which were already identified for antidiabetic action. Overall, this study shows that the MECA exhibits antidiabetic activity in STZ-induced diabetic rats. Therefore, MECA can be considered for further studies to evaluate its mechanism for the effective management of diabetes. © 2016, Springer Science+Business Media Dordrecht.