OBJECTIVES: We conducted a cost-effectiveness analysis of two dipeptidyl-peptidase inhibitors, saxagliptin and linagliptin, used in combination with metformin for the treatment of Type II diabetes. METHODS: A decision tree model was developed using cost and effectiveness data for saxagliptin + metformin and linagliptin + metformin using published literature. Costs were evaluated using third party payer's perspective and included costs of drugs, physician visits, lab tests, hospital costs, and  costs associated with adverse events. All costs were adjusted to 2013 dollars using consumer price index and were calculated for a period of one year. A comprehensive literature review of Pubmed, Cochrane library and Google Scholar was conducted to obtain data for clinical efficacy and costs. Clinical efficacy values were obtained from randomized clinical trials. The primary efficacy measure was the proportion of participants achieving HbA1c levels <7.0%. Base case analysis was analyzed as incremental cost per effective treatment. One way sensitivity analysis was performed by varying  costs by 10% associated with drug treatment to evaluate the robustness of the model. RESULTS: In the base-case analysis, saxagliptin was found to have better clinical outcomes and lower costs than linagliptin as a combination therapy with metformin with an incremental cost effectiveness ratio of 30.51. Considering only direct costs for the treatment, expected cost per effective treatment for a year was found to be $179.25 for saxagliptin while that for linagliptin was $298.99. Sensitivity analysis also indicated saxagliptin to be the dominant treatment option. CONCLUSIONS: Saxagliptin in our study was found to be favored over linagliptin in combination with metformin for the treatment of Type II Diabetes. These results may help decision makers develop appropriate treatment options. Type II diabetes being a lifestyle disorder, further research by inclusion of indirect costs associated with the treatment options may help strengthening the results.