OBJECTIVES Smoking in diabetics is associated with a worse prognosis and vascular complications. The available evidence on healthcare resources utilization and associated costs in diabetics who smoke is limited or nonexistent. Thus, the objective was to compare healthcare resource utilization and costs according to smoking status in patients with type 2 diabetes in clinical practice. METHODS A retrospective cohort nested case-control study was designed. Cases were current smokers, while two types of controls (former smokers and never smokers) were matched, two controls per case, for age, sex, duration of diabetes, and burden of comorbidity using data from electronic medical records. Non-institutionalized diabetics, both genders, age >18 years, seen consecutively over a 5-year period before the index date were enrolled. Perspective of both the National Health System and the Society were chosen and costs of healthcare resource utilization and loss of productivity due to sick leaves were compared among groups using a linear general model with covariates. RESULTS A total of 2,490 records were analyzed: 498 from cases, 996 from former smokers, and 996 from never smokers. Mean age was 63.4 years (64.9% male). Smokers had higher HbA1c (7.4% vs. 7.2% and 7.2%, respectively, p = 0.013) and a lower degree of metabolic control (49.2 % vs. 54.7% and 55.8%, p = 0.036). Smokers had higher average annual costs (€3,583) than former smokers (€2,885) and never smokers (€2,183), p<0.001. Mean annual healthcare cost saving per patient was associated with elapsed time of quitting smoking from €950 in subjects quitting smoking 2-year to €1173 5-year or more, p<0.05.   CONCLUSIONS Diabetic smoker patients had lower metabolic control, higher health resource utilization, and more sick leave, resulting in higher healthcare costs and lost productivity compared with both former and never diabetic smokers. Healthcare cost-savings was associated with elapsed time from quitting smoking.