Objectives: To investigate the relative performance of treatment with a paclitaxel-eluting balloon (PEB) compared with an everolimus-eluting stent (EES) for in-stent restenosis (ISR) in patients with diabetes mellitus (DM). Background: ISR remains a challenge in contemporary clinical practice, particularly in patients with DM. Methods: In the multicenter randomized DARE trial, patients with BMS or DES ISR were randomized in a 1:1 fashion to treatment with a PEB or an EES. Patients underwent angiographic follow-up after 6 months. For the purpose of this analysis, the relative performance of PEB versus EES in diabetic patients was investigated. Results: Of 278 patients enrolled in DARE, 88 (32%) had DM, of whom 46 were randomized to EES and 42 to PEB treatment. Of patients with DM, 48 (55%) had DES-ISR. Angiographic follow-up was available in 30 patients (72%) in the PEB group and 36 patients (78%) in the DES group. There were no differences in terms of 6-months minimal lumen diameter in diabetic patients treated with EES (1.46 ± 0.66 mm) versus PEB (1.78 ± 0.58 mm, P = 0.15). Adverse events at one year follow-up were similar in both groups, with Major Adverse Events (MAE, death, target vessel MI, or TVR) occurring in 17.4% in the EES group versus 11.9% in the PEB group, P = 0.44. Conclusions: In patients with ISR and DM, use of a PEB resulted in similar 6-months in-segment minimal lumen diameter and comparable rates of MAE. In-segment late loss at 6 months was significantly lower in the PEB arm. Although larger trials in DM patients with ISR are necessary, PEB is a promising treatment option obviating the need for additional stent implantation.