The Current study aims to investigate the interaction between traditionally used anti-diabetic agent hydro-alcoholic extract of Terminalia pallida fruits (HATP) and oral hypoglycemic agent gliclazide. Initial dose optimization was performed after administration of 200 mg/kg and 400 mg/kg of extract and determining reduction in serum glucose levels in normal rats. A pharmacokinetic interaction study was performed in both normal and streptozocin induced (55 mg/kg) diabetic rats by administration of gliclazide only or combined with HATP at 400 mg/kg. Single-dose and repeated dose (28 days) pharmacodynamic and pharmacokinetic interaction studies were performed in diabetic rats after co-administration by measuring serum glucose levels and gliclazide levels respectively. Biphasic pharmacokinetic (serum concentration) and pharmacodynamic (reduction in serum glucose levels) profile was demonstrated by gliclazide. HATP demonstrated higher and dose proportionate serum glucose reduction at 400 mg/kg in normal rats. The reduction in serum glucose levels in normal and diabetic rats was significantly higher in the combined group as compared to only gliclazide group. Repeated co-administration showed a higher reduction in serum glucose levels as compared to single time co-administration. On day 28 biochemical parameters are estimated to evaluate effect on oral administration of HATP with gliclazide for 28 days to diabetic animals. The results are shown a significant improvement in dyslipidemia, triglyceride levels and liver functional parameters such as SGOT, SGPT, ALP, and total protein in HATP combination as compared to the vehicle control group. There was a significant variation observed in pharmacokinetic parameters with single dose co-administration in normal, diabetic rats and in repeated dose co-administration in diabetic rats. HATP showed a significant pharmacodynamic and pharmacokinetic interaction with gliclazide, which necessitates caution and dose adjustment in co-administration of gliclazide with HATP to avoid severe hypoglycemia.