OBJECTIVES: To estimate the burden of diabetes mellitus (DM) and its complications in the Netherlands. METHODS: The PHARMO Record Linkage System comprised among others linked drug dispensing, hospital and clinical laboratory data from approximately 2.5 million individuals in the Netherlands. Patients with DM were included in the study cohort during 2000‑2004 if they used antidiabetic drugs or had HbA1c ≥ 6.5mmol/l or had a hospitalisation for DM or a diabetic complication in the measurement year or in the preceding year. Controls free of diabetes were 1:1 matched to patients with diabetes, on birth year, zip code and gender. Complications (hospitalisations and dispensings for cardiovascular disease/eye problems/amputations) were classified into stages. Complications attributed to DM were estimated as complication stages 1 and 2 among patients minus those among controls. Drug costs were extrapolated to the Netherlands by direct standardisation. RESULTS: From 2000 to 2004, the annual prevalence of DM in the Netherlands increased from 454,000 to 641,000 patients. Severe cardiovascular complications attributed to diabetes increased from 18,000 to 39,000 patients. Total cost associated with antidiabetic drug treatment and hospitalizations, attributed to DM, increased from €442,308,000 to €822,333,000. Most of these costs (€535,672,000 in 2004) were due to hospitalizations. Cost of hospitalizations and cardiovascular drugs among control subjects increased from €275,123,000 to €608,392,000. CONCLUSIONS: Drug treatment, hospitalisations and cost attributed to diabetes mellitus have almost doubled between 2000 and 2004, but so did the “background” costs in the general population, perhaps due to preventive efforts.