Internet-based patient portals are intended to improve access and quality, and will play an increasingly important role in health care, especially for diabetes and other chronic diseases. Diabetes patients with limited health literacy have worse health outcomes, and limited health literacy may be a barrier to effectively utilizing internet-based health access services. We investigated use of an internet-based patient portal among a well characterized population of adults with diabetes. We estimated health literacy using three validated self-report items. We explored the independent association between health literacy and use of the internet-based patient portal, adjusted for age, gender, race/ethnicity, educational attainment, and income. Among 14,102 participants (28% non-Hispanic White, 14% Latino, 21% African-American, 9% Asian, 12% Filipino, and 17% multiracial or other ethnicity), 6099 (62%) reported some limitation in health literacy, and 5671 (40%) respondents completed registration for the patient portal registration. In adjusted analyses, those with limited health literacy had higher odds of never signing on to the patient portal (OR 1.7, 1.4 to 1.9) compared with those who did not report any health literacy limitation. Even among those with internet access, the relationship between health literacy and patient portal use persisted (OR 1.4, 95% CI 1.2 to 1.8). Diabetes patients reporting limited health literacy were less likely to both access and navigate an internet-based patient portal than those with adequate health literacy. Although the internet has potential to greatly expand the capacity and reach of health care systems, current use patterns suggest that, in the absence of participatory design efforts involving those with limited health literacy, those most at risk for poor diabetes health outcomes will fall further behind if health systems increasingly rely on internet-based services.