OBJECTIVES: To estimate the direct medical costs associated with managing complications of type 2 diabetes in the United States. METHODS: A combination of direct data analysis and microcosting was used to estimate costs for an event leading to either a hospital admission or outpatient care, and the post-acute care associated with managing macrovascular, microvascular, and other complications. Data were obtained from many sources, including inpatient and emergency department care databases, national physician and laboratory fee schedules, government reports, and published literature. For each complication, the event year costs derived refer to those associated with the acute episode and, when appropriate, include subsequent ongoing care provided within the first year following the acute episode. Annual costs after the first year for the continued management of complications were also estimated. All costs are reported in 2012 USD. RESULTS: Annual costs accrued per patient in the year of the event were estimated for the following macrovascular complications: myocardial infarction $56,445, ischemic stroke $42,119, congestive heart failure $23,758, ischemic heart disease $21,406, and transient ischemic attack $7,388. Event year costs per patient for microvascular complications were: chronic kidney disease $71,714, lower extremity amputations $9,041, blindness $2,862, and diabetic foot ulcers $2,147. Cost estimates of a medically managed hypoglycemic episode were: $176, $1,311, and $16,478 for a mild, moderate, or severe (i.e., requiring hospitalization) episode. CONCLUSIONS: This study provides updated and additional estimates of the cost of diabetic complications in 2012 USD, following the methodology used to generate prior cost estimates in 2000 USD referenced in many diabetes economic models (O’Brien et al. Clin Ther 2003;25(3):1017-1038). Managing complications results in substantial costs to the health care system, as macrovascular complications yield high inpatient care costs in the event year, and long-term management of complications such as chronic kidney disease lead to substantial ongoing annual costs.