OBJECTIVES: There has been a significant increase in both elderly population and the prevalence of type 2 diabetes mellitus (T2DM) in China. This study was to estimate the annual direct medical cost and healthcare resource utilization in elderly insured patients with T2DM. METHODS: A retrospective database analysis was conducted using electronic medical records of 13 cities in China in 2013, provided by China Health Insurance Research Association. Adults met defined T2DM criterion in January without diagnoses of ketoacidosis, cancer, or schizophrenia were identified and followed up until December 31, 2013. Descriptive statistics analyses were performed. RESULTS: A total of 31,465 eligible T2DM patients were identified, of which 66.0% were elderly (age≥ 60). Mean annual costs per patient and reimbursement ratio were ￥22,059.26 and 76.6% in elderly patients, compared to ￥16,070.83 and 74.0% in patients under 60. Mean annual cost in elderly T2DM patients with chronic kidney disease (CKD) was ￥33,928.57, which was ￥13,490.25 higher than those without CKD. In 31,093 patients occurred outpatient visits, drug costs accounted for 75.2% of total outpatient costs. In elderly patients the mean annual outpatient cost was ￥14,329.23 and the number of outpatient visits was 42.8, compared to ￥12,178.49 and 31.6 in patients under 60, respectively. 28.4% (N=5,901) of the elderly patients had at least one hospitalization. The mean annual hospitalization cost per patient was ￥27,765.25, with 25.25 days of annual mean length of stay (LOS) and 1.78 times number of admissions. In elderly inpatients, ￥5,981.91 higher average hospitalization costs and 3.30 days longer LOS were found compared to patients under 60. CONCLUSIONS: T2DM patient had frequent outpatient visits with corresponding high costs where drug costs accounts for a significant portion. Overall direct medical costs were considerable in elderly T2DM patients, especially in those with comorbid CKD.