The purpose of this study was to reseach the effect of Daesihotang and its component groups on diabetes, free radical and antioxidative defense system in alloxan-induced diabetic rats. The experimental group was divided into three groups: Daesihotang (DS), Soyangyak (DS1), Yangmyungyak (DS2). The results were obtained as follows: The level of glucose, triglyceride, total cholesterol, creatinine in serum were considerablely reduced by Daesihotang. And the level of HDL cholesterol, albumin, total protein in serum were increased by Daesihotang significantly. And the level of BUN has some decreased, but with no significancy. In the study of Daesihotang on free radical scavenging effect in vitro, it has shown that Daesihotang and its components group have significant suppressing effect on peroxidation of linoleic acid on concentration. And in other experiments as scavenging effect of DPPH radical, inhibitory effect of superoxide in xanthine-xanthine oxidase system and inhibitory effect on lipid peroxidation reaction by hydroxy radical in $H_2O_2-Fe^{2+}$ system, Daesihatang have some activity, but with no significancy. In the study of Daesihotang on antioxidative defense system in vivo, the activity of GOT and GPT in serum were significantly increased; and the amounts of lipid peroxide in serum was reduced significantly but in liver no significancy. In hepatic catalase activity, Daesihotang has showed significant effect. In the level of hepatic glutathione, Daesihotang increased the amount of glutathione significantly. And in the activity of glutathione-s-transferase, Daesihotang has decreasing effect but has no significancy. These result suggest that Daesihotang has strong effect on diabetes and it is useful to prevent diabetes, but has less effect on peroxidative damage by free radical.