Telemedicine is a promising but largely unproven technology for providing case management services to patients with chronic conditions who experience barriers to access to care or a high burden of illness. We conducted a randomized controlled trial comparing telemedicine case management to usual care, with blinding of those obtaining outcome data, in 1,665 Medicare recipients with diabetes, aged 55 years or greater, and living in federally designated medically underserved areas of New York State. In New York City, 98% of participants were black or Hispanic, 69% were Medicaid-eligible, and 93% reported annual household income ≤$20,000. In upstate New York, 91% were white, 14% Medicaid eligible, and 50% reported annual household income ≤$20,000. A baseline survey found that 95% of participants in New York City and 67% in upstate New York reported that they did not know how to use a computer. The primary endpoints were HgbA1c, blood pressure, and low density lipoprotein (LDL) cholesterol levels. In the intervention group (N = 844), mean HgbA1c improved over 1 year from 7.35% to 6.97%, and from 8.35% to 7.42% in the subgroup with baseline HgbA1c ≥7% (N = 353). In the usual care group (N = 821), mean HgbA1c improved over 1 year from 7.42% to 7.17%. Adjusted net reductions (1-year minus baseline mean values in each group, compared between groups) favoring the intervention were as follows: HgbA1c, 0.18% (p = 0.006), systolic and diastolic blood pressure, 3.4 (p = 0.001) and 1.9 mmHg (p < 0.001), and LDL cholesterol, 9.5 mg/dl (p < 0.001). In the subgroup with baseline HgbA1c ≥7%, net adjusted reduction in HgbA1c favoring the intervention group was 0.32% (p = 0.002). Mean LDL cholesterol level in the intervention group at one year was 95.7 mg/dl. The intervention effects were similar in magnitude in the subgroups living in New York City and upstate New York. A satisfaction survey of intervention group participants (N = 346 respondents) showed high levels of satisfaction with major intervention components. A satisfaction survey of participating primary care physicians (N = 116 respondents) showed positive perceptions for acceptability, impact on patients and communication. Telemedicine case management improved glycemic control, blood pressure levels, and total and LDL-cholesterol levels at 1 year of follow-up. Telemedicine is an effective method for translating modern approaches to disease management into effective care for underserved populations.