Alcoholic extract of Terminalia arjuna [TA] was evaluated far its hepatoprotective activity against carbon tetrachloride (CCl$_4$)-induced hepatic damage in rats. The hepatoprotective activity of TA was evaluated by measuring levels of serum marker enzymes like serum glutamate oxaloacetate transaminase (SGOT), serum glutamate pyruvate transaminase (SGPT), serum alkaline phosphatase (SALP). The serum levels of total proteins(TP), total albumins (TAL) and bilirubin (BILN) were also estimated. The histological studies were also carried out to support the above parameters. Silymarin (SM) was used as standard drug. Administration of TA (250 and 500 mg/kg/po) markedly prevented CCl$_4$-induced elevation of levels of SGOT, SGPT, SALP, TP, TAL and BILN. These biochemical observations were supplemented by histopathological examination of liver sections. Alcoholic extract of TA also shown significant in-vitro free radical scavenging activity against 1, 1-diphenyl-2-picryl hydrazyl (DPPH) and nitric oxide (NO) radicals. Thus, the present study provides a scientific rationale for the traditional use of this plant in the management of liver diseases.