OBJECTIVES: Analysis of the post-interventional follow-up of the UKPDS found that the benefits of intensive therapy persisted even 10 years after the trial, a finding consistent with “metabolic memory” (i.e., early metabolic status influences long-term outcomes).  We assessed the potential impact of “metabolic memory” on the cost-effectiveness of intensive versus conventional care in Sweden. METHODS: We used the Economic and Health Outcomes (ECHO)-T2DM model to simulate lifetime health outcomes (including QALYs) and medical costs for 500 cohorts of 2,000 newly diagnosed patients.  In each cohort, patients were randomized to intensive or conventional care and HbA1c treatment effects corresponding to the UKPDS study were applied for the first ten years. Consistent with findings from the follow-up study, HbA1c values were assumed to converge by year 10.  Subsequently in the intensive care arm, “metabolic memory” effects (reduced risk for certain micro- and macro-vascular events and mortality) were applied. Two sets of “metabolic memory” effects from the UKPDS follow-up study were used: those observed in the sulfonylurea/insulin sub-sample and those observed in the metformin sub-sample.  A scenario assuming no “metabolic memory” effects was simulated for comparison. Unit costs were derived from the Swedish literature (modeling studies and a regression analysis of inpatient care costs based on administrative hospital data linked to the Swedish National Diabetes Register). RESULTS: Including “metabolic memory” had a large effect on the cost-effectiveness estimates.  The incremental cost-effectiveness ratio declined from SEK2,387,292 (~€250,000) without “metabolic memory” to SEK731,308 (~€75,000) assuming effects from the sulfonylurea/insulin sample and to SEK445,425 (~€45,000) assuming effects from the metformin sample. CONCLUSIONS: These results suggest that good glycemic control early in the disease continuum may confer significant medical cost-savings over the long-term.  Evaluations of the cost-effectiveness of intensive glycemic control in newly-diagnosed patients should potentially consider the health and cost consequences of   “metabolic memory”.