Diabetes mellitus is caused by the elevation of blood sugar levels and has become a serious health concern worldwide with the number of cases steadily increasing annually. Due to the increased side effects and costs associated with the use of conventional drugs, alternative treatment methods that use natural compounds from medicinal plants have been researched. This review summarizes the recent advances and discoveries of plant based natural compounds used for the treatment of Type 2 diabetes as well as their mechanisms of action, which include the inhibition of carbohydrate metabolizing enzymes, reducing oxidative stress, modifying the activity of the PPARγ receptor, and modifying the activity of glucose transporters. We also describe the most prevalent classes of chemical compounds that have been shown to exhibit significant antidiabetic activity, thereby showing promise for development into novel drug molecules. These classes include polysaccharides, polyphenols, alkaloids, terpenes and quinones among others.