Objective To investigate the clinical efifcacy of Chinese and western medicine on toxic diffuse goiter (Graves disease) diabetes mellitus. Methods 50 cases of Graves' disease and diabetes mellitus collected in Xianhe hospitol of Dongying city,Shandong Province from June 2010 to June 2011 were randomly divided into observation group(n=25) and control group(n=25). Control group was adopted conventional western medicine treatment. Based on western medicine treatment, observation group was, conducted dialectical types according to TCM theory, and used appropriate Chinese medicine to treatment. Efficacy of two groups after 8 weeks treatment were evaluated. Results The total effective rate in observation group was 90%, higher than 80% in control group(P<0.05). Compared with before treatment, insulin resistance index (HOMA-IR), TT 3, TT 4 levels were signiifcantly decreased, and TSH was signiifcantly increased in both two groups(P<0.01). The improvement of TT 3, TT 4, TSH in treatment group were more obvious than control group, and the difference was signiifcant (P<0.01). Conclusion The combination therapy was effective on patients with Graves' disease and diabetes.