Transitioning from the inpatient to outpatient setting is often a problematic aspect of diabetes mellitus (DM) care. Different factors during hospitalization may adversely affect glycemic control in patients, who are frequently discharged on regimens that differ markedly from prehospitalization outpatient regimens. Moreover, the discharge recommendations may not have been tested adequately during a relatively short hospital length of stay and pose a significant threat to patient safety upon discharge. Our pilot study evaluated the effect on hospital utilization of the transitional care clinic (TCC), where patients with DM are seen within 2 to 5 days of hospital discharge. One hundred patients with DM, who were either medically indigent (no insurance or Medicaid and no primary care providers) or covered by Medicaid, and who did not have a primary care provider, were randomized into either a control or an intervention group upon discharge from the hospital. Subjects from the intervention group (n = 50) were seen in the TCC. All subjects were contacted 90 days after discharge to collect information about emergency department visits and readmissions. Thirteen subjects from the control group and 13 from the intervention group visited the emergency department within 90 days of discharge. Fourteen control subjects (28%) and 10 intervention patients (20%) were rehospitalized for various medical conditions during the follow-up period (P = not significant). Among patients originally admitted for DM-related issues, 6 of 14 in the control group (42.9%) and 2 out of 16 in the intervention group (12.5%) were readmitted during follow-up (P < 0.05). We conclude that the TCC may be effective for the prevention of rehospitalizations in indigent patients admitted for DM-related problems and who did not have primary care providers. The benefit of the TCC was not seen when patients with DM were admitted for other medical problems. Larger randomized controlled trials are needed to confirm this preliminary finding.