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<strong>Objective:</strong> The present study was aimed to study anti-diarrhoeal activity of a polyherbal formulation (PHF) in rats and elucidate its mechanism of action.<br /> <strong>Materials and Methods:</strong> Anti-diarrhoeal activity of PHF was investigated using castor oil-induced diarrhoea, small intestinal transit and enteropooling models in rats. PHF was tested at 75, 150 and 300 mg/kg rat body weight. Loperamide was used as a reference control for <em>in vivo</em> studies. Anti-secretory action was evaluated against heat labile enterotoxin (from <em>Escherichia coli</em>)induced secretion in rat ileal loop model. The effect of PHF (12.5-100 µg/ml) on cAMP-dependent secretory activity was investigated against forskolin-induced cAMP release in HT-29 cells.<br /> <strong>Results:</strong> PHF demonstrated significant (p≤0.05) anti-diarrhoeal activity by increasing the time for first faecal drop and inhibited diarrhoeal episodes by 43, 58 and 60% at 75, 150 and 300 mg/kg body weight, respectively in a dose-dependent manner. Also, the intestinal transit was inhibited upto 33% and the weight of secretory contents induced by castor oil was significantly reduced by PHF, approximately 29% in enteropooling assay. On the other hand, the intestinal loop instilled with PHF and enterotoxin from <em>E. coli </em>demonstrated 61% inhibition of fluid accumulation as compared to loop instilled with enterotoxin only. <em>In vitro </em>studies indicated that PHF inhibits cAMP release in HT-29 cells corroborating the anti-secretory effects observed in aforesaid studies.<br /> <strong>Conclusion:</strong> The results suggest that the PHF possesses anti-diarrhoeal activity, evident through reduced faecal output, decreased intestinal transit and anti-secretory activities.