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Background: This community-based study conducted in Kinmen aimed to discover whether screening for diabetic retinopathy (DR) among Chinese with type 2 diabetes was economically feasible and clinically effective., Methods: A total of 971 community-dwelling adults previously diagnosed with type 2 diabetes in 1991-1993 underwent DR screening in 1999-2002 by a panel of ophthalmologists, who used on-site indirect ophthalmoscopy and 45-degree color fundus retinal photographs. Economic evaluation included estimates for cost effectiveness and the cost utility of screening for DR., Results: For each DR case, screening efficacy and utility decreased, while cost increased with the length of the screening interval. The cost per sight year gained in the annual screening, biennial screening, 3-year screening, 4-year screening, 5-year screening, and control groups were New Taiwan dollars (NT dollars) 20962, NT dollars 24990, NT dollars 30847, NT dollars 37435, NT dollars 44449, and NT dollars 83411, respectively. The cost per quality-adjusted life year gained by the annual screening, biennial screening, 3-year screening, 4-year screening, 5-year screening, and control groups were NT dollars 21924, NT dollars 25319, NT dollars 30098, NT dollars 35106, NT dollars 40037, and NT dollars 61542, respectively. Threshold values indicate that the screening programs are highly sensitive to screening cost in the plausible range., Conclusion: Screening for DR is both medically and economically worthwhile. Annual screening for DR among Chinese with type 2 diabetes should be conducted. Prevention programs aimed at improving eye care for patients with type 2 diabetes result in both substantial federal budgetary savings and highly cost-effective health care.