OBJECTIVES: The present analysis estimated overall annual inpatient and outpatient costs incurred by Swedish patients with diabetes mellitus between 2000 and 2004 based on data from the RECAP study, which included medical records on 13,873 patients with diabetes mellitus retrospectively identified in computerised registers at 26 primary care centres in Uppsala county. Patients included in the study fulfilled at least one of the following three criteria: 1) diagnosis of diabetes mellitus; 2) prescription of oral anti-diabetic drug; and 3) fasting blood or plasma glucose value indicative of diabetes. The average length of follow-up upon inclusion was 4.5 years. METHODS: Costs of inpatient care were estimated by classifying hospitalisations of study patients into diagnosis-related groups (DRGs) according to the Nord-DRG classification system and assigning average costs per DRG (2002 prices) according to a national list relying on individual patient level costs incurred at Swedish hospitals applying the Nord-DRG system. Costs of outpatient care were estimated by assigning unit costs of outpatient care-giver contacts obtained from published sources to data on study patients' care-giver contacts as recorded in medical records at participating primary care centres. RESULTS: The average annual cost of inpatient care over the studied years was €1088 per patient (SD €4460; n=9292 on average). Between 2000 and 2004, an annual increase in costs of between 9% and 15% was observed (constant prices). The average annual cost of outpatient care during the studied years was €363 per patient (SD €437) with little variation over the years. GP visits accounted for 40% of outpatient costs, the average patient making 1.7 GP visits per year. CONCLUSIONS: Diabetes continues to impose a heavy economic burden on society. Cost estimates from this population-based sample of Swedish diabetic patients may serve as reference values for a Swedish setting.