Due to changes in the age structure of the population the number of frail elderly diabetics is rising. This change is accompanied by an increase in nursing care efforts and requirements in both home care services and nursing homes. The aim of this study was to evaluate the quality of care in the home care and nursing home setting concerning the structure, the process and the outcome quality at the institutional and patient level. This is an observational transversal study. At the institutional level a standardised questionnaire of the German Diabetes Research Institute was sent to all nursing homes (37) and home care services (88) in Dresden. At the patient level 37 homebound patients and 46 residents were recruited. A Geriatric assessment and a clinical examination were performed and a blood sample was analysed. Patients with moderate or severe cognitive impairment were excluded. The prevalence of diabetes in home care services was 27.2% and in nursing homes 36.1%. The participation rate among the institutions was 21.6% (n = 27). In 14% (n = 12) of the diabetic patients the HbA1c was above 8% (poor metabolic control) and in 24% (20) it was between 7% and 8% (regular metabolic control). 56.6% (n = 21) of the homebound elderly diabetics and 46.7% (n = 21) of the nursing home residents with diabetes were hospitalized at least once during the last 12 months. Our study showed a high prevalence of diabetes in both types of institutions in Dresden and a high hospitalisation rate of the elderly diabetics, although 62% of the patients had an optimum metabolic control. These facts indicate that the quality of care of frail elderly diabetics concerning the multimorbidity might be further improved.