OBJECTIVES: To examine medication adherence among Medicare Part D beneficiaries with diabetes and explore whether there is any association of using mail-order pharmacy (vs. retail pharmacy) with better adherence in this patient population.    METHODS: Using administrative pharmacy claims data, we conducted a retrospective cohort study on the Medicare Part D beneficiaries who newly initiated oral anti-diabetic treatment between July 1, 2008 and December 31, 2008. The primary outcome of interest was medication adherence to oral anti-diabetics during the benefit year of 2009, which was measured using the proportion of days covered (PDC). Mail-order pharmacy users were matched to retail pharmacy users via propensity scoring, controlling for patient’s demographic and clinical characteristics.  RESULTS: A total of 22,546 patients with diabetes were identified. The average PDC was 0.60 and only 41.6% of the study population was adherent (defined as PDC≥0.8) with oral anti-diabetic medications during calendar year 2009. The matched sample included 1361 patients from each cohort. Compared with the retail pharmacy group, mail-order pharmacy users demonstrated a significantly higher PDC (0.68 vs. 0.61; P<0.001) throughout the benefit year. More patients in the mail-order pharmacy group (49.7%) were adherent with their oral antidiabetic medications compared to 42.8% in the retail pharmacy group. CONCLUSIONS: Adherence with oral anti-diabetic medications among Medicare Part D beneficiaries is suboptimal.  Patients using mail-order pharmacy were likely to have better adherence than those who used retail pharmacies for their medication refills. The causal relationship between mail-order pharmacy use and adherence, however, should be further examined in a randomized study setting.