Diabetes mellitus disproportionately affects ethnic minorities and has serious economic, social, and personal implications. This study examines the effect of diabetes disease burden and social resources on health-related quality of life (HRQOL) among older rural adults with diabetes. Data come from a population-based cross-sectional survey of 701 adults (age > or =65 years) with diabetes in North Carolina from three ethnic groups: African American, Native American, and White. HRQOL was assessed using the 12-item short-form health survey (SF-12). Mean scores were 35.1 +/- 11.4 and 50.5 +/- 10.8 for the physical and mental components of the SF-12, respectively. In bivariate analyses, scores were significantly lower for Native Americans than Whites for both components. In multivariate analyses, higher physical HRQOL was associated with male sex, greater mobility ability, fewer chronic conditions, exercising vs not exercising, fewer depressive symptoms, and not receiving process assistance. Higher mental HRQOL was associated with greater mobility ability, fewer chronic conditions, and a high school education or more. Diabetes appears to have a substantial effect on physical HRQOL. Physical disability associated with diabetes may have a greater impact in the rural environment than in other areas. Aspects of rural social milieu may help to keep mental HRQOL high, even in the face of severe chronic disease. Ethnic differences in HRQOL are largely accounted for by diabetes disease burden and, to a lesser extent, social resources. Strategies to reduce diabetes-related complications (long term) and assist mobility (short term) may reduce ethnic disparities in HRQOL.