Apple CEO Tim Cook test-drove a device that tracks his blood sugar, hinting at Apple's interest

Tim Cook has been spotted at the Apple campus test-driving a device that tracks blood sugar, which was connected to his Apple Watch.

A source said that Cook was wearing a prototype glucose-tracker on the Apple Watch, which points to future applications that would make the device a "must have" for millions of people with diabetes -- or at risk for the disease.

As CNBC reported last month, Apple has a team in Palo Alto working on the "holy grail" for diabetes: Non-invasive and continuous glucose monitoring. The current glucose trackers on the market rely on tiny sensors penetrating the skin. Sources said the company is already conducting feasibility trials in the Bay Area.

Tim Cook also talked about the device to a roomful of students in February at the University of Glasgow, where he received an honorary degree. He didn't say if it was a medical device from a company like Medtronic or Dexcom , or an Apple prototype.

"I've been wearing a continuous glucose monitor for a few weeks," he said. "I just took it off before coming on this trip."

Cook explained that he was able to understand how his blood sugar responded to foods he was eating. He made modifications to keep his blood sugar more constant.

In Silicon Valley, a huge health trend is low-carb, high fat diets. Increasingly, venture capitalists and executives are finding that if they cut down their sugar consumption, they see dramatic results including increased productivity and weight loss.

Cook has a lot of interest in personal health. For instance, he's also an active gym-goer, and recently told CNBC's Jim Cramer that he has lost 30 pounds.

At the University of Glasgow, he reiterated Apple's commitment to the health space and spoke about the struggles faced by people with diabetes.

"It's mentally anguishing to stick yourself many times a day to check your blood sugar," he said. "There is lots of hope out there that if someone has constant knowledge of what they're eating, they can instantly know what causes the response... and that they can adjust well before they become diabetic."

Cook also described the impediments in the U.S. to making high-quality and intuitive health products, namely the priority for medical device makers to get reimbursement from insurance companies. "This is an area where I'm very excited about Apple's contribution," he said. "Very excited."