Objective: To determine the prevalence of diabetes in inpatients in Melbourne hospitals. Design: Point prevalence survey of all inpatients in each hospital on a single day between 30 November 2010 and 22 November 2012. Setting: 11 hospitals in metropolitan Melbourne including community, secondary and tertiary hospitals and one aged care and rehabilitation centre. Participants: 2308 adult inpatients in all wards apart from intensive care, emergency, obstetrics and psychiatry. Main outcome measures: Point prevalence of self-reported diabetes, details of current medication, self-reported frequency of complications. Results: Diabetes status was obtained in 2273 of 2308 inpatients (98.5%). Of these, 562 (24.7%) had diabetes (95% CI, 22.9%-26.5%). Diabetes prevalence ranged from 15.7% to 35.1% in different hospitals (P < 0.001). Patients with diabetes were older, heavier and more likely to be taking lipid-lowering, antihypertensive and blood-thinning medications. Of 388 patients with complete medication information, 270 (69.6%) were taking oral hypoglycaemic agents alone or in combination with insulin, 158 (40.7%) were treated with insulin (67 [17.3%] with insulin alone) and 51 (13.1%) were not taking medication for diabetes. The frequency of diabetes complications was very high: 207/290 (71.4%) for any microvascular complication, 275/527 (52.2%) for any macrovascular complication and 227/276 (82.2%) for any complication. Conclusion: The high burden of diabetes in Melbourne hospital inpatients has major implications for patient health and health care expenditure. Optimising care of these high-risk patients has the potential to decrease inpatient morbidity and length of stay as well as preventing or delaying future complications. A formal Australian national audit of inpatient diabetes would determine its true prevalence and consequences, allowing rational planning to deal with shortcomings in its management.