An estimated of 8 million people in the U.S. has type II diabetes mellitus but are unaware of it. OBJECTIVES: The study investigated the cost-effectiveness of early detection of type II diabetes mellitus in various risk groups. METHODS: A Markov model was constructed based on a societal perspective. There were 4 stages in the model: 1) unknown diabetes status 2) alive with diagnosed diabetes 3) alive with diagnosed diabetes and related complications, namely retinopathy, blindness, neuropathy, end-state renal disease, lower leg amputations, circulatory disorders and 4) die secondary to diabetes or its complications. Individuals could transit from one state to another annually as a function of the predicted risk factors from epidemiological studies. The model assumed that the patients who were screened positive for diabetes and received treatment would have reduced rate of related complications as observed in the Diabetes Control and Complications Trial. Health care costs included in the model were screening tests, diabetes treatment cost, complications and death. Various screening test thresholds have also been considered in the model analysis. RESULTS: Diabetes screening of the entire non-pregnant adult US population yielded a cost-effectiveness ratio of $24,600 per quality-adjusted life year. The cost-effectiveness of screening only extremely obese patients with a family history of diabetes was $10,083 per quality-adjusted life year. CONCLUSIONS: The study suggested that active screening for type II diabetes mellitus in high-risk individuals was cost-effective. More information on the actual clinical outcomes for oral diabetes medications is needed to establish the precision of these estimates.