Banaba (Lagerstroemia speciosa L.) extracts have been used for many years in folk medicine to treat diabetes, with the first published research study being reported in 1940. This review summarizes the current literature regarding banaba and its constituents. The hypoglycemic effects of banaba have been attributed to both corosolic acid as well as ellagitannins. Studies have been conducted in various animal models, human subjects and in vitro systems using water soluble banaba leaf extracts, corosolic acid-standardized extracts, and purified corosolic acid and ellagitannins. Pure corosolic acid has been reported to decrease blood sugar levels within 60 min in human subjects. Corosolic acid also exhibits antihyperlipidemic, antioxidant, antiinflammatory, antifungal, antiviral, antineoplastic and osteoblastic activities. The beneficial effects of banaba and corosolic acid with respect to various aspects of glucose and lipid metabolism appear to involve multiple mechanisms, including enhanced cellular uptake of glucose, impaired hydrolysis of sucrose and starches, decreased gluconeogenesis.