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Introduction To improve the public health system's ability to prevent and control chronic diseases, we must first understand current practice and develop appropriate strategies for measuring performance. The objectives of this study were to measure capacity and performance of local health departments in diabetes prevention and control and to investigate characteristics associated with performance. Methods In 2005, we conducted a cross-sectional mailed survey of all 85 North Carolina local health departments to assess capacity and performance in diabetes prevention and control based on the 10 Essential Public Health Services and adapted from the Local Public Health System Performance Assessment Instrument. We linked survey responses to county-level data, including data from a national survey of local health departments. Results Local health departments reported a median of 0.05 full-time equivalent employees in diabetes prevention and 0.1 in control. Performance varied across the 10 Essential Services; activities most commonly reported included providing information to the public and to policy makers (76%), providing diabetes education (58%), and screening (74%). The mean score on a 10-point performance index was 3.5. Characteristics associated with performance were population size, health department size and accreditation status, and diabetes-specific external funding. Performance was not better in localities where the prevalence of diabetes was high or availability of primary care was low. Conclusion Most North Carolina local health departments had limited capacity to conduct diabetes prevention or control programs in their communities. Diabetes is a major cause of illness and death, yet it is neglected in public health practice. These findings suggest opportunities to enhance local public health practice, particularly through targeted funding and technical assistance.