This study was undertaken to evaluate the relationship and effects of diabetes on liver morphology, architecture and function. The hepatic effects of diabetes were evaluated in vivo using streptozotocin (STZ)-induced diabetic rats as an experimental model. The degree of hepatic dysfunction was measured by using biochemical parameters like serum transaminases (ALT and AST), alkaline phosphatase (ALP)and pseudocholinesterase (PChE) while the histopathological studies were carried out to support the enzymic Parameters. The aim of the study was to investigate the association between diabetic hepatic complications and liver enzyme alterations. This study was performed in the Department of Anatomy; Institute of Pharmaceutical Sciences and Institute of Diabetology and endocrinology of Baqai Medical University, Karachi. Diabetes was induced by a single dose of STZ (45 mg/kg, b.w.) given intraperitoneally in sodium citrate buffer at pH 4.5. Eighty albino rats were divided into five groups: control (A) and STZ treated (B, C, D, and E) which were sacrificed 2, 4, 6 and 8 weeks post treatment respectively. Histopathological examination of liver showed accumulation of lipid droplets, lymphocytic infiltration, increased fibrous content, dilatation and congestion of portal vessels and proliferation of bile ducts. Increased levels of aspartate aminotransferase (AST), alanine aminotransferase (ALT), ALP and PChE were observed in the liver. It seems that the diabetic complications in the liver like hepatocyte destruction etc. are likely to be due to alterations in enzyme levels.