Diabetes is the 7th leading chronic disease in the United States, and is responsible for substantial consumption of medical resources. Few studies have examined the distribution of the disease among patients of lower socioeconomic groups. OBJECTIVE: To report patterns of drug and health care utilization among people with diabetes who received Medicaid benefits. METHODS: Medicaid administrative claims for medical services with a primary ICD-9 code for diabetes dated during calendar year 2002 were extracted. Claims for recipients younger than 65 years of age were used for the analysis. From these claims, unique and anonymous recipient codes were collected and then used to extract prescription claims for diabetes-related medications. Reported costs were from the perspective of Medicaid. RESULTS: There were 14,306 recipients identified with diabetes. Among gender, ethnic, and age groups, a majority of recipients were female (63%), white (93%), and between 21 and 64 years of age (96%). The rate of diabetes was 40 per 1000 recipients. Medical services were consumed at a rate of 174 outpatient visits per 1000 recipients, 39 emergency department (ED) visits per 10,000 recipients, and 26 hospital admissions per 10,000 recipients. Costs for medical services totaled nearly $8 million, a majority of which was for outpatient services (51%). Medicaid paid approximately $65 per outpatient visit, $202 per ED visit, and $3,971.41 per hospitalization related to diabetes. The cost for diabetes-related drugs and supplies equaled nearly $7 million amounting to $512 per recipient. A majority of the prescription claims were for insulin (34%), thiazolidinediones (25%), oral sulfonylureas (24%), and home testing supplies (11%). CONCLUSION: Utilization for diabetes-related medical services among a group of recipients covered by Medicaid varied by age, gender, and ethnicity. Outpatient care and prescription medications accounted for the most utilized health care resources for diabetes.