OBJECTIVES: Diabetes mellitus type 2 (DM2) is a high prevalence disease in Mexico which represented expenditures in the Mexican Health System above US$450 millions. The purpose of this study was to compare the cost–effectiveness ratios between multiple pharmacologic treatments for adult patients with DM2 who didn't reach metabolic control (HbAC1<7%) using oral hypoglycemic agents or diet from the Mexican healthcare payer's perspective. METHODS: We used a ten-year Markov analysis model to estimate costs and effectiveness. Markov model includes several DM2 complications stages (retinopathy, cardiovascular diseases, neuropathy, nephropathy and death). Effectiveness measure was the number of life years gained (LYG). Transition probabilities were obtained from international published literature (UKPDS studies). Comparators were: NPH insulin, glargine insulin, inhalable insulin, NPH insulin + metformin and pioglitazone + metformin. Resource use estimations were performed employing hospital records in second and third healthcare level hospitals from the Social Security Mexican Institute in Mexico City (n=311). Costs included emergency, outpatient and inpatient services, drugs, comorbidities procedures, etc. Costs and LYG were discounted 5% annually. One-way and probabilistic sensitivity analyses were performed and acceptability curves were constructed. RESULTS: Expected costs for patients using inhalable insulin resulted in US$17,997, followed by NPH insulin (US$19,433), glargine insulin (US$20,338), NPH insulin + metformin (US$19,642) and pioglitazone + metformin (US$25,258). LYG per patient resulted in 8.13 yrs with inhalable insulin vs. 8.05 yrs with the other therapies in average. ICERs for inhalable insulin against other therapies resulted within the range US$2,213-US$3,141. Results were robust to Monte Carlo first order sensitivity analysis and acceptability curves showed that inhalable insulin was the option most cost-effective with a 69.9% of certainty. CONCLUSION: Despite its higher cost in the Mexican market, inhalable insulin was in the long term the most cost – effective option for the treatment of DM2 patients who didn't reach metabolic control.