Objective: This is a health economic evaluation of the long acting insulin analogue, insulin detemir (IDet) when type 2 diabetes patients are switched from either oral antidiabetics (OAD) or from neutral protamine Hagedorn (NPH) insulin. The data used as clinical input for the analysis was the Austrian sub-population of the large observational trial, PREDICTIVE. Methods: A published validated diabetes model was used to estimate the long-term cumulative incidence of complications, life expectancy (LE), quality-adjusted life expectancy (QALE) and lifetime costs when switching to IDet from OADs or NPH. The outcomes were modeled based on the clinical findings and validated Austrian costs and treatment patterns. The analysis used the-third party health care payer perspective. Future costs and clinical benefits were discounted at 5% per annum. Results: Conversion to insulin detemir was projected to improve life expectancy by 0.624 years when switching from OADs and 0.201 years from NPH. Quality-adjusted life years (QALYs) increased by 0.52 versus OADs and 0.368 versus NPH. Direct medical costs over patient lifetimes were projected to be increased by €5585 compared to OAD-treatment and €2206 versus NPH treatment. Thus, incremental cost-effectiveness ratios of IDet versus OAD and NPH treatment were €10,739 and €5,996, respectively. Estimates were controlled by multiple sensitivity analyses and were found to be robust. Probabilistic sensitivity analyses showed that the cost-effectiveness acceptability percentages with a threshold of €30,000 were 100% for OAD switch and 99.9% for NPH switches. Conclusion: Short-term improvements seen when switching to IDet from OADs or NPH were projected to show improvements in quality-adjusted life expectancy with a cost-effectiveness ratio which fell well within the range usually considered acceptable value for money.