The objective of the study was to estimate the direct costs of diabetes care to patients attending secondary care facilities in Madras, India. A total of 596 subjects were studied, at the Private Hospital for Diabetes Mellitus (PHD) (n = 422), and at the Government General Hospital (GGH) (n = 174). A simple interview schedule enabled a face to face interaction with the patients by the research investigator which elicited a frank and true response. The validity of the data collected was established by independent scrutiny of financial records in a sub sample. Payment bills for expenses of 140 subjects chosen on a random basis from the total sample of 422 PHD patients were compared with the costs reported by the subjects. There were no statistically significant differences both in the inpatient and the outpatient cases between the reported cost and actual cost. Median bill value (total costs)=Rs.1010 (range 195-16700) reported value=880 (110-20355) Z = -0.97, P = 0.33 and, for outpatients, median bill value=Rs.800 (195-4560) reported value=Rs. 740 (110-6320) Z = -1.56, P = 0.12. For inpatients, median bill value = Rs. 4235 (1289-16700) reported value=Rs.5459 (1285-20355), Z = -1.27, P5 years duration of diabetes spent more than those who had <5 years of duration; Rs.5570 (360-75200) and Rs.3220, (460-25600), respectively. All differences between these sub-groups were statistically significant. Within the ambit of economic aspects of the population in a developing country, the direct cost on diabetes health care is very high for many people.