OBJECTIVES: To assess the economic burden and health care utilizations of diabetes in the U.S. veteran population. METHODS: Adult (≥18 years of age) patients diagnosed with diabetes (International Classification of Disease 9th Revision Clinical Modification [ICD-9-CM] code 250.x0 or 250.x2) were identified from the dataset between October 1, 2009 through September 30, 2011. The first diagnosis date was designated as the index date. A comparator group was created consisting of patients without diabetes but of the same age, region, gender and index year, and matched by baseline Charlson Comorbidity Index. The index date for the comparator group was randomly selected to minimize selection bias. Continuous medical and pharmacy benefits 1 year pre- and 1 year post-index date were required for patients in both groups. One-to-one propensity score matching (PSM) was applied to compare health care costs and utilizations during the follow-up period between the diabetes and comparator groups, adjusted for baseline demographic and clinical characteristics. RESULTS: A total of 1,427,948 patients were identified for the diabetes and comparator cohorts. After applying 1:1 PSM matching, a total of 340,933 patients were matched from each group, ensuring well-balanced baseline characteristics. Patients diagnosed with diabetes were more likely to report inpatient (8.93% vs. 2.09%, p<0.01), emergency room (13.66% vs. 5.61%, p<0.01), outpatient (99.63% vs. 53.78%, p<0.01), and pharmacy visits (87.13% vs. 52.69%, p<0.01). They also incurred higher health care costs, including inpatient ($3,031 vs. $582, p<0.01), emergency room ($137 vs. $51, p<0.01), outpatient ($3,375 vs. $1,272, p<0.01), pharmacy ($708 vs. $293, p<0.01) and total costs ($7,113 vs. $2,148, p<0.01) than the comparator group.  CONCLUSIONS: U.S. veteran patients diagnosed with diabetes reported a significantly higher economic burden compared to the matched controls over a 12-month period.