OBJECTIVES: Elderly population is growing and so is the prevalence of diabetes among them. The present study was to explore direct medical cost and medication usage pattern in hospitalized elderly patients with type 2 diabetes (T2D) among insured urban population in China. METHODS: A pooled cross-sectional analysis was performed using China Health Insurance Research Association Database of year 2010, 2011 and 2012. Hospitalizations with T2D were identified using ICD-10 codes. Adult patients without any cancer or ketoacidosis were included. Descriptive statistics were used to analyze hospitalization costs and medication usage in T2D patients by age group cut at 60. RESULTS: A total of 11,157 T2D hospitalization records from 13 cities were analyzed, with 56.77% are elderly patients, and 32% of total patients have at least one comorbidity. The mean length of stay (LOS) per admission was 16 days in elderly patients, and 14 days in patients under 60. The average direct cost per hospitalization and reimbursement ratio in elderly patients were ￥9,036.74 (±7675.74) and 77.34%, compared to ￥8084.34 (±5304.76) and 72.11% in patients under 60, respectively. On average, LOS was found 1 day longer, and hospitalization costs were found ￥1120 higher in T2D patients with comorbidities compared to those without. The average number of medications used per admission was 13 and 11 in patients ≧ 60 and under 60, respectively. In T2D elderly patients, majority (68.92%) used combination of oral antidiabetic drugs (OAD) and insulin. Acarbose and metformin were the most 2 frequently used OAD in all treatment choices. For non-antidiabetic medications, the most two frequently used drugs were aspirin and mecobalamine. CONCLUSIONS: Direct medical cost is considerable in elderly T2D patients under hospitalization, especially in those with comorbidities. The study also showed a complex medication usage pattern in elderly population.