The study assessed: (1) the prevalence of exclusive use of complementary and alternative medicine (CAM), exclusive use of modern medicine and combined use; (2) the factors associated with exclusive CAM use; and (3) the expenditure for CAM use among type-2 diabetes patients in rural Kerala. We surveyed 400 diabetes patients selected by multi-stage cluster sampling. Exclusive CAM use was reported by 9%, exclusive modern medicine by 61% and combined use by 30%. Patients without any co-morbidity were four times, those having regular income were three times and those who reported regular exercise were three times more likely to use exclusive CAM compared with their counterparts. Expense for medicines was not significantly different for CAM compared with modern medicine both in government and private sector. Patients with any co-morbidity were less likely to use CAM indicating that CAM use was limited to milder cases of diabetes.