OBJECTIVES: To identify and critically appraise cost-effectiveness models developed to evaluate type 2 diabetes (T2D) treatments and to assess which types of treatment effects they capture. METHODS: A systematic search was performed in MEDLINE, EMBASE, Centre for Reviews and Dissemination databases at the University of York, and Health Economic Evaluation Database for the period to September 2008. The websites of Health Technology Assessment (HTA) bodies in different countries were also screened for relevant models. For each of the identified original models, details of the structure, data in- and outputs and consistency were extracted and critically appraised using published criteria. RESULTS: 78 articles and 41 HTAs reporting relevant economic evaluations were identified.  There were ten models with multiple publications, and a further ten models with one associated publication. The critical review demonstrated that most of the existing models had the same fundamental structure, used similar microsimulation techniques and were based on the same key data sources. However, the process for identification of relevant data and their synthesis, as well as the selection of outcomes was, at times, inconsistent and lacked transparency. The models differed according to which diabetes complications and treatment-related adverse events were captured. For example, just one model incorporated changes in patient weight, despite the fact that weight gain can be a side effect of some treatments, and weight loss a potential benefit of others. CONCLUSIONS: Whilst many economic models exist in T2D, most share common features such as the model type. Identified shortcomings are lack of transparency in data identification and evidence synthesis as well as the selection of the modelled outcomes. Future models should aim to include all relevant treatment outcomes, whether these relate to effects on underlying diabetes and its complications or to short- or long-term side effects of treatment.