OBJECTIVES: To study prescription pattern, calculate the cost of antidiabetic drugs and to evaluate the adherence to  treatment  guidelines  in  diabetic  patients  attending  the  medicine  outpatient  department  in  a  tertiary  care teaching hospital. METHODS: A prospective  observational  study  was  carried  out  for  a  period  of 5  months.  The diabetic patients who visited the medicine outdoor department were included. Demographic data and complete prescription details were recorded in the structured case record form. Cost of the drug therapy was calculated from the patient’s bills. Indian Council for Medical research guidelines-2005 for diabetes management was used to evaluate the adherence. RESULTS: A total of 250 patients were enrolled in the study with mean age 57.91 ± 9.37. Out of 250 patients 126 (50.4%) were male and rest were female. A total of 1,391 drugs were prescribed, with mean of 5.56 ± 2.52 drugs  and  out  of  which  539  drugs  were  antidiabetics  with  mean  of  2.18  ±  0.96.  In monotherapy, metformin was frequently 218 (40.45%) prescribed.  Glimepiride and metformin was the most frequently prescribed in 119 (76.28%) out of 156 antidiabetic drug combinations. Most commonly used drugs other than antidiabetics were aspirin 146 (18.9%) and atorvastatin 119 (15.41%). Mean cost of therapy for a month for a diabetic patient was 354.60 ± 305.72 INR. Majority 209 (83.6%) of prescriptions was in accordance to guidelines. CONCLUSIONS: Metformin  was  the  most  frequently  prescribed  drug  in  the  diabetes  patient.  Metformin and glimepiride being the most frequent combination used.  Majority of the prescriptions followed standard guidelines. The cost of prescription can be reduced by choosing the most economic drugs (generic) without changing its quality.