The National Health Service in England has invested substantially in recent years to improve the quality of primary care services for patients with chronic diseases such as diabetes. A key aim of this investment is to reduce associated complication rates and decrease consequent hospital admission rates. The goal of the study was to examine associations between the quality of primary care services and hospital admission rates for diabetes mellitus in England. An ecological cross-sectional study design was used. Three hundred three primary care trusts in England participated in the public reporting and performance-linked reimbursement of quality measures, including measures relevant to diabetes care. A total of 1,760,898 persons with diabetes registered with 8441 family practices in England. Hospital admission rates (total admissions for diabetes, admissions for ketoacidosis) were compared with quality of care scores, diabetes prevalence and neighborhood socio-economic status. We found a 10-fold variation across the country in total admissions for diabetes despite uniformly high scores on quality measures over the first year of the new family practitioner contract. Significant but weak inverse associations were found between primary care quality scores and hospital admission rates in patients aged 60 years and older, with a correlation coefficient of -0.21 (P < .001) between glycemic control and total admissions. Neighborhood socioeconomic status was more strongly correlated with total hospital admission rates than quality scores in patients aged 25-59 years (r = 0.58; P < .001) and 60 years and older (r = 0.45; P < .001). Quality of care scores and prevalence data were available only at the practice level rather than at the patient level. Improving the quality of primary care services may lead to modest reductions in demand for hospital services among older patients with diabetes. However, low neighborhood socioeconomic status is more strongly associated with hospital admission rates for diabetes.