OBJECTIVES: In spite of the fact that primary care physicians are recommended to following evidence-based clinical guidelines for management of diabetes, no studies have currently evaluated the clinical and economic impact of following diabetes guidelines in Ontario. METHODS: To assess the short- and long-term impact of treating patients with type II diabetes according to the guidelines in South-western Ontario, two cohorts of newly diagnosed cases in 2002 were used. The first group included patients who were not treated according to guidelines during the diagnostic year and the two years after diagnosis. The second group consisted with individuals who were not treated according to the guidelines only during the first year but for the two subsequent years of their diagnosis they were treated to achieve the specified targets for HbA1c, blood pressure and lipid levels according to guidelines. The short-term impacts of intervention in clinical outcomes were calculated and were used to extrapolate to 40 years horizon using the Ontario Diabetes Economic Model (ODEM). For each cohort, the event rates for seven diabetes-related complications, the mean difference in cost, and expected quality-adjusted life-years (QALYs) were calculated based on baseline risk and 3-years following the intervention. RESULTS: Almost 500 individuals newly diagnosed with diabetes in 2002 were not treated according to guidelines during the first year following diagnosis. Of those 236 were treated according to guidelines in the second and third year following diagnosis and 259 individuals were not (the control cohort). A small difference has been observed between the cohorts in terms of intermediate outcomes as well as the lifetime predicted cumulative costs, QALYs, life expectancy and event rate. CONCLUSIONS: The results of this study indicated that treating patients to guidelines as used by physicians did not make an impact on the short and long-term outcomes associated with diabetes.