OBJECTIVES: Dapagliflozin (Forxiga®) is the first sodium-glucose co-transporter-2 (SGLT-2) inhibitor approved by the European Medicines Association, and positively assessed by the National Institute for Health and Care Excellence (NICE) for type 2 diabetes mellitus. This study investigates the cost-effectiveness of dapagliflozin compared with a sulphonylurea (SU) when added to metformin in patients inadequately controlled with metformin mono-therapy. METHODS: The published and validated CARDIFF diabetes model was used to conduct the analysis. Clinical inputs were derived from a randomized clinical trial comparing dapagliflozin and glipizide in combination with metformin. Based on these 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 total costs. Univariate and probabilistic sensitivity analyses (PSA) were conducted. RESULTS: Compared to SU added to metformin, dapagliflozin add-on to metformin was associated with an incremental benefit of 0.467 QALYs (95%CI: 0.420; 0.665) at an additional cost of £1,246 (95%CI: £613; £1,637), resulting in an ICER point estimate of £2,671 per QALY gained. The univariate analyses showed that no input parameter change inflated the ICER above £15,000 per QALY. The PSA showed that at a willingness‑to-pay threshold of £20,000 per QALY gained, dapagliflozin treatment had an estimated 100% probability to be cost-effective compared to an SU treatment strategy. These findings were shown to be robust with all sensitivity analyses. CONCLUSIONS: Dapagliflozin in combination with metformin was shown to be a cost-effective treatment option for patients who are inadequately controlled with metformin mono-therapy within established UK cost‑effectiveness thresholds.