I have deployed a CMT bean in Weblogic 8.1 and packaged the hibernate libraries in the ear. But to my surprise, I found that when weblogic starts it complains with NoClassDef Error for hibernate classes like HibernateException . Then I placed the jars in weblogic classpath and it worked fine. Why ear classloader can't load the hibernate jars i dont undestand if all jars are in ear.

But this is not feasible and desirable to place all jars in system classpath. Seems some classpath issue..I am looking into this ..if any body has any idea or faced such an issue, pls intimate.

You really need to find some docs on J2EE packaging and classloading if you're going to be developing Ent. archives. Here's a link to an oldie-but-goodie...
http://www.theserverside.com/articles/article.tss?l=ClassLoading

Simply placing jar files into an ear does *not* make them available to components within the ear (aside from JBoss and its cooky classloader). Instead, each ear component needs to have manifest Class-Path entry specifying resources in the ear which should be loaded into that component's classloader. That's the purest way to do it, although different app servers handle this slightly differently.

The simplest way to get it done in weblogic 8.1 is to put hibernate jars into EAR's APP-INF/lib directory. This weblogic-specific feature loads classes in that jars with EJB classloader. You hibernate classes will be available for EJB and WAR modules.

Hope this helps.