OBJECTIVES: To model and evaluate consequences of enhanced treatment of type 2 diabetes mellitus on cost, life expectancy and development of complications in the Bulgarian health care system. METHODS: The extensively published and validated CORE Diabetes Model was used to perform lifetime simulations for the representative diabetic patient in Bulgaria diagnosed at 55 years. The analysis compared two alternative treatment scenarios with current standards of care. In the first alternative scenario the model examined the human and economic costs of 10% reduction in the risk factors for developing diabetes related complications. In the second scenario consequences of treating to targets set in American Diabetes Association (ADA) guidelines were simulated. Cost of treatment and complications were based on officially published sources for medicines prices (www.mh.government.bg), for hospital charges (www.nhif.bg) and verified by expert opinion survey (1 BGN = 0.51 EUR). Future costs were discounted with 5%. RESULTS: Treatment to targets postpones minor complications by up to 4 years, delays major complications by 3 to 4 years and extends life expectancy from diagnosis by 3 years compared with the baseline scenario. Total discounted cost savings over remaining life expectancy from the diagnosis were from 2483 BGN to 2908 BGN per person. CONCLUSIONS: Enhanced treatment leads to avoidance or delay of the complications of diabetes. This significantly reduces the impact diabetes can have on patients’ quality of life, life expectancy and cost of diabetes treatment in Bulgarian health care system settings.