OBJECTIVE: To improve clinical diabetes care, patient knowledge, and treatment satisfaction and to reduce health-adverse culture-based beliefs in underserved and underinsured populations with diabetes. RESEARCH DESIGN AND METHODS: A total of 153 high-risk patients with diabetes recruited from six community clinic sites in San Diego County, California were enrolled in a nurse case management (NCM) and peer education/empowerment group. Baseline and 1-year levels of HbA(1c), lipid parameters, systolic and diastolic blood pressure, knowledge of diabetes, culture-based beliefs in ineffective remedies, and treatment satisfaction were prospectively measured. The NCM and peer education/empowerment group was compared with 76 individuals in a matched control group (CG) derived from patients referred but not enrolled in Project Dulce. RESULTS: After 1 year in Project Dulce, the NCM and peer education/empowerment group had significant improvements in HbA(1c) (12.0-8.3%, P < 0.0001), total cholesterol (5.82-4.86 mmol/l, P < 0.0001), LDL cholesterol (3.39-2.79 mmol/l, P < 0.0001), and diastolic blood pressure (80-76 mmHg, P < 0.009), which were significantly better than in the CG, in which no significant changes were noted. Accepted American Diabetes Association standards of diabetes care, knowledge of diabetes (P = 0.024), treatment satisfaction (P = 0.001), and culture-based beliefs (P = 0.001) were also improved. CONCLUSIONS: A novel, culturally appropriate, community-based, nurse case management/peer education diabetes care model leads to significant improvement in clinical diabetes care, self-awareness, and understanding of diabetes in underinsured populations.