The economic burden of diabetes has increased over time with disease severity. Previous publications investigating the effects of physical activity (PA) on medical costs have made use of small sample sizes. We assessed the relationship between PA and 1-year medical expenditure among Taiwanese patients with type-2 diabetes mellitus (T2DM).Data were recruited from three governmental databases, including the 2012 adult preventive health service database. Participants were grouped as inactive (no exercise), insufficiently active (exercise < 150 minutes/week), and sufficiently active (exercise >150 minutes/week) individuals. Patients were stratified according to age and Charlson score. Multivariate linear regression models were used to determine β-coefficients and their P values.Overall, 218,960 individuals were identified with diabetes. The prevalence of the disease was 13.1% among sufficiently active, 35% among insufficiently active, and 51.9% among physically inactive adults. In general, patients who had exercise >150 minutes/week had lower health care spending (i.e., US$ 755.83) followed by those who had less than 150 minutes/week (US$ 880.08) when compared with inactive patients (P < .0001). Moreover, health care costs derived from outpatient or inpatient care were lower for sufficiently active than inactive participants (P < .0001).Compared with being sedentary, PA was associated with lower health care costs of Taiwanese adults with diabetes mellitus.