Phagocytosis and intracellular killing of Staphylococcus aureus by granulocytes were examined in diabetic patients. There was no significant difference in the phagocytic activity of granulocytes between control and diabetic-subjects. However, intracellular killing by granulocytes was significantly reduced in insulin-treated diabetic patients compared with control subjects. No significant difference was observed between controls and diet-treated diabetic patients. It is suggested that decreased activity of intracellular killing of bacteria in granulocytes is one of the mechanisms of increased susceptibility to infection in patients with advanced stages of diabetes mellitus.