In view of remarkable similarities between two autoimmune disorders, rheumatoid arthritis and type 1 diabetes, and associated long-term adverse effects of pharmaceutical drugs in the treatment of such chronic metabolic disorders, herbal drugs are being targeted. This study evaluated immuno-modulatory activity of chloroform fraction of standardized hydro-alcoholic extract of root and stem parts of Boerhavia erecta L. (BE) containing 1-(4-hydroxytridecyloxy) pentadecan-4-ol by gene expression, in vitro and in vivo methods. A new bioactive compound, 1-(4-hydroxytridecyloxy) pentadecan-4-ol, hitherto unreported, was isolated from BE. The isolated compound was characterized by NMR and FTIR and the chloroform fraction containing the bioactive compound was subjected to in vivo anti-inflammatory and antidiabetic studies. Carrageanan-induced paw edema and cotton pellet granuloma in Wistar rats were considered as acute and chronic inflammatory models, respectively, with 5 groups (6 animals per group) in each study. After oral glucose tolerance test (OGTT), streptozotocin (STZ)-induced diabetic rat model with 6 groups of 6 animals each was used for antidiabetic study. In in vitro studies on RAW cell lines, the cell lines were stimulated with Lipopolysaccharide (LPS) and then treated with interleukin (IL) IL-23, IL-1β and IL-6 that were co-cultured both in the presence and absence of different doses (10 mg, 20 mg and 40 mg) of chloroform fraction of BE extract and finally the inhibition of IL-17 expression was recorded. The chloroform fraction having 1-(4-hydroxytridecyloxy) pentadecan-4-ol, at 40 mg/kg body weight, was effective as an antidiabetic and anti-inflammatory agent and exhibited statistical significance with that of control animal groups (p < 0.01). The study showed the inhibition of IL-17 significantly (p < 0.0001) in the presence of IL-23 and other cytokines. These immuno-modulatory activities are probably through IL-17/IL-23 axis which needs to be to be further confirmed by human clinical trials targeting at least two autoimmune diseases.