Ethanol extract of the of rhizome of Nymphaea alba, at graded doses was investigated for anti-diarrhoeal activity in term of reduction in the rate of defecation in castor oil induced diarrhoea and anti-inflammatory activity in term of reduction in inflammation of rat paw. To understand the mechanism of its anti-diarrhoeal activity, its effect was further evaluated on intestinal transit and castor oil induced intestinal fluid accumulation (enteropooling). At various doses (100 & 200 mg/kg body weight) the extract showed a remarkable anti-diarrhoeal activity evidenced by the reduction in the rate of defecation. Results are comparable to that of standard drug diphenoxylate (5 mg/kg body weight). A single oral dose of N. alba extract of 100 mg/kg body weight produced a significant decrease in the severity of diarrhoea. Extract produced profound decrease in intestinal transit (25.73 and 37.29%) also significantly inhibited castor oil induced enteropooling comparable to that of intraperitoneal injection of standard drug atropine sulphate at doses of 0.1 mg/kg body weight and loperamide at 5 mg/kg body weight respectively. Results indicate N. alba possess significant anti-diarrhoeal activity and may be a potent source of anti-diarrhoeal drug in future. But the extract did not show anti-inflammatory activity.