Nowadays there is an increasing demand for low calorie foods with high therapeutic properties. The development of dairy foods with the addition of medicinal herbs and probiotics is the need of the hour. Therefore, the present study was aimed to develop functional yoghurt using Moringa oleifera leaf extract (ME) as a source of all kinds of vitamins, trace minerals and fibre content, and to assess the sensory, physico-chemical, textural and microbial properties of the developed functional product. Different levels of ME (0.5, 1, 1.5, 2 and 2.5 per cent) were added to the yoghurt to assess the optimum level of inclusion. The plain yoghurt samples prepared without ME was taken as the control. Fermentation time was significantly reduced in the ME yoghurt when compared with the control yoghurt. The pH value of control and treatments ranged from 4.51 to 4.67. No variation was found in the fat and total solids content of the control and treatment yoghurt samples. The textural properties like firmness and consistency of control and treatments exhibited a significant (p < 0.05) difference among them. As the ME inclusion level increased, the firmness and consistency scores of the treatments were also increased. The coliform and yeast and mould count of control and treatments exhibited no significant difference among them. Increasing the level of ME significantly (p < 0.05) increased the level of probiotic bacteria in yoghurt and the maximum probiotic viability was shown by the yoghurt with highest ME concentration. The developed functional yoghurt was also subjected to organoleptic evaluation. Accordingly, Moringa oleifera leaf extract at the rate of 1.5 per cent was found to be superior in terms of sensory and textural qualities for inclusion in the functional yoghurt that was found to be more beneficial with numerous therapeutic properties and good probiotic viability.