Researchers from Duke University Medical Center said daily consumption of caffeine in coffee, tea, or soft drinks raises blood sugar levels and may even hinder efforts to control the condition.
Lead author Dr James Lane and his team studied 10 patients with type-2 diabetes and who drank at least two cups of coffee every day. They were managing their diabetes through diet and exercise but no extra insulin.
"Our study suggests that one way to lower blood sugar is to simply quit drinking coffee, or any other caffeinated beverages. It may not be easy, but it doesn't cost a dime, and there are no side effects," Lane said.
Lane said that there are no current guidelines suggesting diabetics should not drink coffee, but added that one day they may come - if further studies support their findings.
The study will be published in the February issue of Diabetes Care.
Diabetes has increased by one-third during the 1990s, due to the prevalence of obesity and an ageing population. There are currently more than 194m people with diabetes worldwide but if nothing is done to slow the epidemic, the number will exceed 333m by 2025, according to the International Diabetes Federation.
In the trial a small glucose monitor was embedded under their abdominal skin of each participants that continuously monitored glucose levels over a 72-hour period.
Capsules containing caffeine equal to about four cups of coffee on one day and then identical capsules that contained a placebo on another day were handed out.
Every participant had the same nutrition drink for breakfast, but were free to eat whatever they liked for lunch and dinner.
The researchers found that when the participants consumed caffeine, their average daily sugar levels went up 8 per cent.
Caffeine also inflated the rise in glucose after meals - increasing by 9 percent after breakfast, 15 percent after lunch and 26 percent after dinner.
"We're not sure what it is about caffeine that drives glucose levels up, but we have a couple of theories," Lane said.
"It could be that caffeine interferes with the process that moves glucose from the blood and into muscle and other cells in the body where it is used for fuel. It may also be that caffeine triggers the release of adrenaline - the 'fight or flight" hormone that we know can also boost sugar levels," Lane added.
Coffee has largely had a series of scientific studies supporting caffeine in various health giving roles.
This month researcher from Harvard Medical School and the Harvard School of Public Health said drinking three or more cups of coffee per day may reduce the risk of ovarian cancer by over 20 per cent.
In November, scientists said unroasted green coffee bean extract taken as a drink or supplement can help people reduce weight.
In 2005 an Austrian research team found evidence that caffeine delivers visibly increased brain activity that stimulates short-term memory.
Diabetes is also having a massive effect on healthcare budgets. Currently, 5 to 10 percent of the world's healthcare budget is spent on diabetes, and by 2025 this figure could reach 40 percent in some countries if predictions of diabetes prevalence are fulfilled. Most of the economic costs of diabetes are attributable to the various complications linked to it, with up to two-thirds of people with diabetes in certain countries developing serious chronic complications.