OBJECTIVES: This study was conducted to estimate quality adjusted life years (QALYs) loss due to diabetes in type 2 diabetic patients of South Korea. METHODS: In order to obtain QALYs loss due to morbidity of type 2 diabetes (T2D), we firstly estimated utility weight difference between T2D patients and non-diabetic subjects by sex and age groups. We consecutively recruited T2D patients aged 20 or over who visited three university hospitals in Seoul and Ilsan from October 2007 to January 2008 and non-diabetic subjects who took a medical examination from June 2008 to Jan 2009 in same hospitals. Utility weight differences on sex and age groups were calculated using the EuroQoL EQ-5D and Korean valuation set, and then QALY losses was estimated using the utilities and the number of T2D patients in 2003 reported by the Korean Diabetes Basic Statistics Study. QALY losses due to T2D mortality corresponded to life expectancy of the death caused T2D from the life table and the Korean Death Certificate in 2003 multiplied by utility weights of healthy people by sex and age groups from the 3rd Korea National Health and Nutrition Examination Survey (2005). We considered a discount rate as 5%. RESULTS: Total 1,072 T2D patients and 387 non-diabetic subjects participated in this survey. Maximum difference between T2D patients and non-diabetic subjects was 0.0418 and minimum difference was 0.0095 by subgroups. QALY loss estimates due to T2D morbidity were about 35,125 QALYs in male and 50,613 QALYs in female. Preterm death caused by T2D brought about 58,186 QALYs in male and 49,432 QALYs in female considering the discount rate. Therefore, total QALY loss was estimated as 193,356 QALYs annually. CONCLUSIONS: The results suggest that QALY loss estimates caused by T2D was 4.0 QALYs/1000 persons in South Korea at 2003.