OBJECTIVES: Diabetic nephropathy is a frequent and serious complication in patients with type-2 diabetes mellitus (DM), and it is the most frequent cause of End Stage Renal Disease (ESRD) in industrialized countries. The global incidence of ESRD continues to rise, and ESRD patients requires intensive and costly treatments such as dialysis or transplantation; thus, the burden of illness is growing and the resources allocated to treatment are increasing. The objective of our study was to evaluate the economic impact of losartan added to the standard care administered to diabetic subjects with  End-Stage Renal Disease in Italy. METHODS: We conducted a cost-effectiveness analysis comparing the economic and clinical outcomes deriving from the administration of additional losartan to standard care versus standard care alone in patients with type 2 diabetes and nephropathy over 3.4 years. The clinical outcome data were based on the results from the RENAAL trial. Direct medical costs referred to the purchase costs of losartan and the cost of National Health Service (NHS) hospitalization. The costs were discounted back at an annual rate of 3%. Also sensitivity analysis was performed. RESULTS: RENAAL study establishes that losartan, along with conventional antihypertensive treatment as needed, confers strong renal protection in patients with type-2 diabetes and nephropathy. Globally, the total cost over 42 months of follow-up was estimated at 9.802,49 € in the losartan and  €13,405,47 in the placebo group, resulting into a cost saving of €3602.98 per patient. Results were robust to both clinical and economic variables. CONCLUSIONS: In addition to the medical benefit, this analysis demonstrated the economic relevance of treatment with losartan in type 2 diabetic patients with nephropathy.