OBJECTIVES: There have been a number of studies quantifying the direct and indirect resource implications associated with severe hypoglycaemia episodes (SHE) and non-severe hypoglycaemia episodes (NSHE). The objective of this study was to calculate the total direct and indirect economic burden associated with SHE and NSHE in insulin treated type 2 diabetes mellitus (T2DM) subjects. METHODS: We conducted two literature reviews of the MEDLINE database for studies published between 1st June 2007 and 1st June 2012. The first assessed the direct (primary and secondary care and treatment related) and indirect resource implications (lost productivity) associated with SHE and NSHE; the second established the frequency of NSHE and SHE in insulin-based clinical trials where sulfonylurea usage was also reported in T2DM. An economic model written in Microsoft Excel was developed to predict the expected annual per-patient cost (using 2011 US costs) associated with the incidence of hypoglycaemia. RESULTS: Resource utilisation from 6 studies and data characterising hypoglycaemia frequency were extracted from 82 studies for a total of 155 trial arms where the search criteria were met. Mean annual hypoglycaemia event rates were 16.4, 8.9, 4.8 and 2.6 for NSHE and 0.083, 0.039, 0.015 and 0.003 for SHE associated with baseline HbA1c levels of 6%, 7%, 8% and 9% respectively.Total expected annual per-patient hypoglycaemia costs were $929, $471, $237 and $117 associated with HbA1c levls of 6%, 7%, 8% and 9% respectively. CONCLUSIONS: In insulin treated T2DM subjects lower HbA1c is associated with higher frequency of hypoglycaemia and associated costs.  Failing to account for the cost burden associated with hypoglycaemia may underestimate the value of diabetes management strategies that minimize hypoglycaemia risk.