The mechanism of the antiulcer effect of Neem leaf aqueous extract to block gastric lesions in rat has been studied with emphasis on acid secretion, oxidative damage and apoptosis. The extract dose-dependently inhibits gastric lesions induced by restraint-cold stress, indomethacin and ethanol. In stress ulcer model, it is more effective than ranitidine but less effective than omeprazole. It also dose-dependently blocks pylorus ligation and mercaptomethylimidazole-induced acid secretion. In the pylorus-ligation model, it is less effective than omeprazole but as effective as ranitidine. It inhibits H+-K+-ATPase activity in vitro in concentration-dependent manner to inhibit acid secretion. Oxidative membrane damage by hydroxyl radical (*OH) as measured by lipid peroxidation in stress ulcer is significantly blocked by leaf extract. Stress-induced apoptotic DNA fragmentation is also protected. The extract also prevents *OH-mediated mucosal DNA damage in vitro by scavenging the *OH. Neem leaf extract, thus, offers antiulcer activity by blocking acid secretion through inhibition of H+-K+-ATPase and by preventing oxidative damage and apoptosis.