The purpose of the present study was to examine the characteristics of healthcare costs for diabetic patients in Taiwan. The study analyzed claim data from the Bureau of National Health Insurance for the period from July 1997 to June 1998. There were 536159 documented diabetic patients who were treated within the universal healthcare system in Taiwan during this study period. The annual number of visits of these diabetic patients was 6.2% of the total outpatient visits of all patients due to all causes during the one-year study period. Diabetes-related problems were the causes of 25.2% of outpatient visits among diabetic patients, while 74.8% of visits were for causes unrelated to diabetes. The distribution of treatment for the diabetic patients was by oral hypoglycemic agents 88.3%, insulin only 6.9%, and a combination of insulin and oral agents 4.8%. Diabetic patients accounted for 4,724,711 hospital inpatient days during the study period, which was 22.1% of the total inpatient days in Taiwan. Of the inpatient admissions, 13.9% were for diabetes as the principal cause, 23.4% were for diabetes-related disease, and 62.7% were for causes unrelated to diabetes. The direct costs of healthcare for the documented diabetic patients was 11.5% of the total costs of healthcare in Taiwan, and was 4.3 times higher than the average costs of care for non-diabetic individuals.