Terminalia arjuna has been used by ancient physicians in cardiovascular disease. The bark is possesses unique properties as it contains flavonoids (exert antioxidant, anti-inflammatory and lipid lowering effects), glycosides (cardiotonic), tannins etc. The present study was designed to evaluate the effect of Terminalia arjuna versus placebo on cardiovascular parameters and platelet aggregation in patients with type 2 diabetes mellitus. Study was randomized, double-blind, parallel group placebo-controlled study in patients with type 2 diabetes mellitus. After consent and screening for eligibility, subjects were randomised to receive either Terminalia arjuna or identical placebo 500mg capsule thrice daily for 8 weeks. Efficacy, safety and platelet function were evaluated before and at end of treatment. There was a highly significant increase in mean cardiac output from 4.34±0.38 to 4.86±0.20 (Lt/min) along with reduction in mean systemic vascular resistance from 1729±93.52 to 1484±115.5 (dyne.sec/cm5) in Terminalia arjuna group. Further, active drug also produced significant inhibition of platelet aggregation compared to placebo. Both treatments were well tolerated. It can be concluded from the present study that Terminalia arjuna by producing significant increase in mean cardiac output along with reduction in mean systemic vascular resistance, and also significant inhibition of platelet aggregation, can be a good therapeutic option for reducing cardiovascular morbidity in diabetic subjects. However, long term studies in more number of subjects are required to confirm this beneficial effect.