OBJECTIVES: To estimate the long-term clinical and economic outcomes associated with repaglinide or nateglinide therapy, both in combination with metformin, in patients with type 2 diabetes inadequately controlled with sulfonylurea or metformin monotherapy, or with low dose glybenclamide plus metformin in the Swedish setting. Based on the results of a recent 16-week clinical trial. METHODS: A published and validated, interactive computer model was adapted to project life expectancy (LE), quality-adjusted life expectancy (QALE), cumulative incidence of complications and costs in the Swedish setting. The model comprises a series of Markov sub-models that simulate the long-term incidence and progression of diabetes-related complications based on published data. Baseline cohort characteristics (mean age 55.8 years, duration of diabetes 7 years, HbA1c 8.4%, BMI 33 kg.m-2) and intervention effects were derived from the clinical trial. Costs were accounted from a societal perspective (treatment, complication and lost-productivity costs) and expressed in year 2005 Swedish Kronor (SEK) values. Clinical and cost outcomes were projected over a lifetime horizon and discounted at 3% per annum. RESULTS: Repaglinide+metformin was associated with an increase in LE of 0.21 years (9.82±0.18 versus 9.61±0.17) and in QALE of 0.17 quality-adjusted life years (6.34±0.12 versus 6.17±0.11) compared to nateglinide+metformin. There was a reduced cumulative incidence of diabetes-related complications associated with repaglinide+metformin treatment, most notably for retinopathy and nephropathy, compared to nateglinide+meformin. Lifetime costs were lower for repaglinide+metformin compared to nateglinide+metformin from both a third party payer (SEK 337,897±11,471 versus SEK 380,867±13,226) and societal perspective (SEK 629,525±22,446 versus SEK 647,635±21,191). CONCLUSIONS: Treatment with repaglinide+metformin was projected to be associated with increased time free of diabetes-related complications and dominant (cost and life saving) from a societal perspective, compared to nateglinide+metformin, in the Swedish setting.