OBJECTIVES: Dapagliflozin (Forxiga®) is the first sodium-glucose co-transporter-2 inhibitor (SGLT-2) approved by the European Medicines Association, and positively assessed by the National Institute for Health and Care Excellence (NICE) for type 2 diabetes mellitus (T2DM). This study evaluates the cost-effectiveness of dapagliflozin compared with a dipeptidyl‑peptidase‑IV (DPP-4) inhibitor when added to metformin in patients inadequately controlled on metformin alone. METHODS: The published and validated CARDIFF diabetes model was used to conduct the analysis. Clinical inputs were derived from a systematic review and network meta‑analysis. Based on clinical inputs and the United Kingdom Prospective Diabetes Study (UKPDS) equations, the model predicts disease progression and the number of micro‑ and macro-vascular complications, along with diabetes‑specific and all‑cause mortality. The perspective of the National Health Service in England and Wales was adopted over a lifetime horizon. Local unit costs and utility data were assigned to the appropriate model parameters to calculate total Quality‑Adjusted‑Life-Years (QALYs) and costs. Univariate and probabilistic sensitivity analyses (PSA) were conducted. RESULTS: Compared to a DPP-4 inhibitor, dapagliflozin was associated with 0.076 incremental QALYs (95%CI: ‑0.028; 0.146) at an additional cost of £412 (95%CI: -£212; £853); resulting in an incremental cost-effectiveness ratio (ICER) of £5,455 per QALY gained. The univariate analyses showed that no input parameter change inflated the ICER above £15,000 per QALY. The PSA estimated that dapagliflozin has a 81% chance to increase QALYs and costs, a 9% chance to increase QALYs and save costs, a 4% chance to reduce QALYs and costs and a 6% chance to reduce QALYs and increase costs. At a willingness-to-pay threshold of £20,000 per QALY gained, dapagliflozin strategy had an 86% probability to be cost-effective in this setting. CONCLUSIONS: Dapagliflozin in combination with metformin was shown to be a cost-effective treatment option for T2DM patients who are inadequately controlled with metformin mono-therapy.