OBJECTIVES: To assess the cost-effectiveness of acarbose in the management of patients with impaired glucose tolerance (IGT) in Sweden using the multinational, randomised, placebo-controlled STOP-NIDDM trial, in which patients with IGT treated with acarbose experienced significant reductions in the incidence of type-2 diabetes and cardiovascular (CV) events. METHODS: A disease state transition model using data from the STOP-NIDDM trial was developed to replicate the management of IGT patients over the 3.3-year trial period. The cost-effectiveness measures were cost per patient free of diabetes and cost per month free of diabetes. Analyses were performed for the total trial population and three subgroups: high risk for diabetes, high risk for CV disease and high risk for combined diabetes-CV disease. Total direct costs were calculated using standard sources and published literature. Costs and outcomes were discounted at 3% and extensive sensitivity analyses were conducted. RESULTS: The incremental cost per patient free of diabetes (month free of diabetes) was 3032€ (136€) and 829€ (35€) for the total study population and high risk diabetes subgroup respectively. Acarbose treatment dominated (i.e. was more effective, less costly) placebo in subgroups at high CV risk and high combined diabetes-CV risk. Deterministic sensitivity analyses showed that the discount rate for costs and the probability of transition to diabetes had the largest impact on results. CONCLUSIONS: Acarbose treatment significantly reduces the incidence of diabetes and CV events in IGT patients. This clinical advantage is expected to lead to reductions in healthcare costs that exceed the acquisition cost of acarbose, thus resulting in overall cost savings in high risk subgroups for CV disease and combined diabetes-CV disease. For the total study population and the high risk diabetes subgroup, savings from fewer cases of diabetes and CV events partly offset the cost of acarbose.