We examined the prevalence of type 2 diabetes and social deprivation in one urban district in Liverpool from October 1995 to September 1996 inclusive. This area has a stable Caucasian population of 176, 682. Lists were made of all known diabetics attending six different medical points of contact during the year, and were condensed and aggregated to eliminate duplicates. From postcode data, each patient was assigned to residence in one of the 14 electoral wards in the district, for which demographic structure and standardized measures of social deprivation were known (Townsend index). The crude period prevalences of type 1 and type 2 diabetes were estimated for each ward. Crude prevalence data were then corrected by applying capture-recapture (CR) techniques to the different patient datasets to allow for undercount. The crude period prevalence (95%CI) of diabetes was 1.5% (1.4-1.5%), or 2585/176, 682. The mean age of people with diabetes was not significantly different between electoral wards. The crude period prevalence of type 2 diabetes within individual wards ranged from 0.4% (0.3-0.6%) in the least deprived area to 4.1% (3.6-4.6%) in the most deprived area. The corresponding range of CR-adjusted period prevalence rates of type 2 diabetes was from 3.2% (2.8-3.6%) to 6.7% (6.1-7.4%), and there was strong correlation between both crude and CR-adjusted prevalence and social deprivation in each ward (r=0.76, p<0.001 for crude; and r=0. 49, p<0.005 for CR-adjusted prevalence). There was no correlation between the crude or CR-adjusted period prevalence rates of type 1 diabetes and Townsend index (r=0.14, p=NS). This strong correlation between the prevalence of type 2 diabetes and social deprivation has important implications for the planning of health-care delivery.