OBJECTIVES: The American Diabetes Association (ADA) has estimated the annual cost of diabetes in the USA at $174 billion (ADA, Diabetes Care, 2008), using multiple and varied sources to derive cost estimates. This study used a single, multi-payer US database to derive private payer-specific estimates of average type 2 diabetes mellitus (T2DM) complication costs, which may be suitable for long-term economic modeling. METHODS: Private health insurance claims were taken from the PharMetrics Patient-Centric Database, which is comprised of adjudicated medical and pharmaceutical claims covering 55 million unique patients from over 90 health plans from across the USA. T2DM patients experiencing at least 1 of 24 major complications from July 1, 2003 through June 30, 2005, along with a T2DM diagnosis prior to or on the date of the index complication, were identified. T2DM complication costs were extracted from 64,556 patients who had a minimum of 12 months follow-up. Cost data for months 13-24 following the complication were taken from a subset of the full patient population who were continuously eligible for at least 24 months (n=47,541). Direct medical costs were subdivided into charges and allowed amounts expressed in $US 2007. RESULTS: The average age of the population was 57 years and 51.8% were male. The most frequently reported complication was peripheral neuropathy (26.3%). First year charges for complications ranged between $272 for ketoacidosis to $38,588 for myocardial infarction, with corresponding allowed amounts of $174 and $14,394, respectively. Second year charges for complications ranged between $0 for ketoacidosis to $21,965 for peritoneal dialysis, with corresponding allowed amounts of $0 and $10,133, respectively.  Among all complications, allowed amounts were significantly lower than charged amounts. CONCLUSIONS: Our study provides an important and representative source of T2DM complication costs for estimating the long-term economic impact of this prevalent and costly disease.