OBJECTIVES:  To estimate and compare annual direct medical costs associated with diabetic complications in patient with type 2 diabetes in the USA and South Korea. METHODS:  Data were obtained from the 2010-2012 Medical Expenditure Panel Survey (MEPS), which is a nationally representative sample of ambulatory population in the US, and the 2010-2012 Korea Health Panel (KHP) which contains health service use and expenditures for a representative sample of Korea. Using ICD-9 CM codes and KCD-6 code, patients were classified as patients with microvascular complications only (nephropahty, neuropathy, retinopahty, or peripheral vascular disease), macrovascular complications only (cardiovascular disease and cerebrovascular disease), both complications, and without complications. Direct medical costs included costs associated with hospitalization, outpatient visits, emergency room visits, and drugs. To compare costs of diabetic patients with and without complications, direct medical costs were estimated using the generalized linear model (GLM) with log link function and gamma distribution after adjusting for patient characteristics. RESULTS:  Among 5,986 and 3,111 patients with diabetes in the US and Korea, respectively, 87.9% and 66.9% patients had no complications; 4.4% and 12.3% patients had microvascular complications only; 7.6% and 15.8% had macrovascular complications only; and 0.2% and 5.0% had both complications. The average annual direct medical costs per patient were $8,782(95%CI:$8,308-$9,256) in the US and $1,910(95%CI:$1,771-$2,050; US$1=KRW1,000) in Korea. After adjusting for patients’ characteristics, annual direct medical costs associated with microvascular complications were 2.26(US) and 1.98(Korea) times greater; macrovascular complications were 2.75(US) and 1.60 times(Korea) greater, while both complications were 5.39(US) vs. 2.97(Korea) times greater than those without complications, respectively. CONCLUSIONS:  Direct medical treatment costs in patients with diabetic microvascular or macrovascular complications were significantly higher than those without diabetes complications, and the magnitudes of additional costs are different between US and Korea. Providing proper treatment of diabetes to prevent or delay diabetic complications is important to minimize treatment costs of diabetes.