OBJECTIVE Premixed insulin is a commonly prescribed formulation for the outpatient management of patients with type 2 diabetes. The safety and efficacy of premixed insulin formulations in the hospital setting is not known. RESEARCH DESIGN AND METHODS In a prospective, open-label trial, we randomized general medicine and surgery patients to receive a basal-bolus regimen with glargine once daily and glulisine before meals (n = 33) or premixed human insulin (30% regular insulin and 70% NPH insulin) twice daily (n = 39). Major outcomes included differences in daily blood glucose (BG) levels and frequency of hypoglycemic events (<70 mg/dL) between treatment groups. RESULTS At the first prespecified interim analysis, the study was stopped early because of an increased frequency of hypoglycemia >50% in patients treated with premixed human insulin. A total of 64% of patients treated with premixed insulin experienced one or more episodes of hypoglycemia compared with 24% in the basal-bolus group (P < 0.001). There were no differences in mean daily BG level after the first day of insulin treatment (175 ± 32 vs. 179 ± 43 mg/dL, P = 0.64) between groups. A BG target between 80 and 180 mg/dL before meals was achieved in 55.9% of BG readings in the basal-bolus group and 54.3% of BG readings in the premixed insulin group (P = 0.23). There was no difference in the length of hospital stay or mortality between treatment groups. CONCLUSIONS Inpatient treatment with premixed human insulin resulted in similar glycemic control but in significantly higher frequency of hypoglycemia compared with treatment with basal-bolus insulin regimen in hospitalized patients with diabetes.