Background- Role of dexamethasone in preventing postoperative nausea and vomiting is well known. However, it may cause increased blood sugar level which may be concern perioperatively particularly in diabetics. Hence we studied effect on perioperative blood glucose levels in diabetic patients receiving PONV prophylaxis with dexamethasone. Methods:120 diabetic patients were enrolled into two groups of 60 patients each. Anaesthesia was induced using i.v. anaesthetic agents and maintained with isoflurane. Study group received 8mg dexamethasone and control group received ondansetron 4mg iv. Blood glucose concentrations were measured at induction and then every 60 min intraoperatively and every 120 minutes upto 24 hours postoperatively. Data were analysed using software IBM© SPSS©. Results: There was significant increase in blood sugar level in patients receiving dexamethasone which peaked around 2 hours and remain elevated compared to control group upto 24hours. The magnitude of rise from the baseline values, was significantly higher in the dexamethasone compared to control group. This difference was statistically significant when both groups were compared (<0.001).