OBJECTIVES It is estimated that the prevalence of moderate-to-severe SA (apnoea-hypopnoea index >15/h) is 10%. Patients with T2DM have a particularly high incidence of SA. T2DM and SA influence the development and progression of each other. This study investigated the effects of PAP therapy in SA patients with T2DM on all-cause mortality and cost of illness (COI) in Germany from a statutory health insurance (SHI) perspective. METHODS A total of >4 million individuals covered by the SHI database were analysed (≈5% of the German SHI population). PAP therapy was initiated in 4,068 patients with SA (PAP group). Propensity score matching was used to define a control group (CG) of 4,068 SA patients matched for age, sex, risk factors/aetiology, region and medication who received usual care (no PAP). Of these, 1,280 patients in the PAP group and 1,186 patients in the CG had comorbid T2DM. This subgroup of patients was followed for 3 years after initiation of PAP therapy. RESULTS Total COI was higher in the PAP group versus CG in year 1 (€8,105 vs €7,037, p<0.0001). After 2 years’ follow-up, COI in the PAP group decreased but remained higher versus CG (€6,842 vs €6,625, p<0.001). After 3 years, PAP group COI was significantly reduced versus CG (€6,798 vs €6,954, p<0.001). PAP recipients had a significantly lower 3-year mortality rate versus CG (7.2% vs 10.9%, p<0.008; relative risk reduction 33.8%). CONCLUSIONS SA patients with T2DM treated with PAP showed significantly reduced mortality and morbidity. Total COI was higher in PAP recipients versus CG in the first two years of follow-up, but during year 3 COI was significantly lower in the PAP group versus CG. In addition to the known advantages of PAP therapy in SA patients with T2DM (e.g. improved glycaemic control), PAP therapy may be beneficial from an economic perspective.