OBJECTIVE: Prospective studies like UKPDS have shown that improved glycemic control in diabetic patients can reduce the risk of micro- and macrovascular complications. To estimate the potential savings to health-care systems due to interventions aimed at improving glycemic control, the cost of complications must be known. The objective of this study was to assess the cost of complications in type 2 diabetic patients in the Netherlands. METHODS: A review of published literature and guidelines was combined with data from on-going research projects and expert interviews to define the management patterns for diabetic complications. Data from detailed cost studies were used to estimate the Event cost (i.e. acute and post-acute care cost in the first year) and State cost (i.e. subsequent recurring annual cost) of complications in 2000 NLG. RESULTS: The cost of nephropathy was dominated by the State cost of end stage renal disease (NLG 132,692). Event and State costs due to retinopathy were relatively low, except for the State cost of blindness (NLG 5,000). Lower extremity amputation costs NLG 33.683 per Event and NLG 1,148 per year for subsequent management. The Event cost for AMI and stroke were NLG 21.877 and NLG 39.867 respectively. The subsequent State costs were estimated at NLG 4,286 and NLG 16,131. Over a simulated 30-year time horizon, the cost due to macrovascular complications would account for 46% of the total cost of complications discounted at 4%. CONCLUSION: The cost of diabetic complications in the Netherlands is substantial. Interventions that improve glycemic control, and moreover, that affect the incidence of end stage renal disease, AMI or stroke are likely to result in substantial cost-offsets.