From Web MD:

Avocado is a tree. The fruit, a popular food, is a good source of potassium and vitamin D. The fruit, leaves, and seeds are used to make medicine.

Avocado fruit is used to lower cholesterol levels, to increase sexual desire, and to stimulate menstrual flow. Some of the oils in avocado (chemists call these oils the “unsaponifiable fractions”) are used to treat osteoarthritis. The seeds, leaves, and bark are used for dysentery and diarrhea.

Avocado oil is applied directly to the skin to soothe and heal skin and to treat thickening (sclerosis) of the skin, gum infections (pyorrhea), and arthritis. Avocado oil is used in combination with vitamin B12 for a skin condition called psoriasis. The fruit pulp is used topically to promote hair growth and speed wound healing. The seeds, leaves, and bark are used to relieve toothache.
 

How does it work?

Avocado contains a lot of fiber, and this may explain its ability to lower cholesterol. Avocado also contains chemicals that might repair cartilage in joints damaged by osteoarthritis.