The nanomedicine and nanobiotechnology is a fast-developing field that has the potential to improve treatment regimens. The antidiabetic and antioxidant activity of iron oxide nanoparticles was investigated. This work focuses on the environmentally friendly manufacture of iron oxide nanoparticles (Fe ₂O ₃NPs) utilizing a polar extract of the root Azadirachta indica. The size, structural shape, absorption spectrum, and other pertinent characteristics of the produced nanoparticles were evaluated. The surface plasmon resonance (SPR) peaks at 231 nm were apparent in the UV-visible spectra, dynamic light scattering, scanning electron microscopy, and Fourier transform infrared spectroscopy were used for characterization. The antioxidant activity was validated approximately 50% DPPH inhibition, while the antidiabetic effect was approximately 65.26% suppression of α-amylase, surpassing the control’s performance. This biosynthetic approach offers a cost-effective, environmentally benign method with potential applications in various fields.