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Abstract Aims To develop a model for estimating the immediate and long-term healthcare costs associated with seven diabetes-related complications in patients with Type 2 diabetes participating in the UK Prospective Diabetes Study (UKPDS). Methods The costs associated with some major complications were estimated using data on 5102 UKPDS patients (mean age 52.4 years at diagnosis). In-patient and out-patient costs were estimated using multiple regression analysis based on costs calculated from the length of admission multiplied by the average specialty cost and a survey of 3488 UKPDS patients’ healthcare usage conducted in 1996–1997. Results Using the model, the estimate of the cost of first complications were as follows: amputation £8459 (95% confidence interval £5295, £13 200); non-fatal myocardial infarction £4070 (£3580, £4722); fatal myocardial infarction £1152 (£941, £1396); fatal stroke £3383 (£1935, £5431); non-fatal stroke £2367 (£1599, £3274); ischaemic heart disease £1959 (£1467, £2541); heart failure £2221 (£1690, £2896); cataract extraction £1553 (£1320, £1855); and blindness in one eye £872 (£526, £1299). The annual average in-patient cost of events in subsequent years ranged from £631 (£403, £896) for heart failure to £105 (£80, £142) for cataract extraction. Non-in-patient costs for macrovascular complications were £315 (£247, £394) and for microvascular complications were £273 (£215, £343) in the year of the event. In each subsequent year the costs were, respectively, £258 (£228, £297) and £204 (£181, £255). Conclusions These results provide estimates of the immediate and long-term healthcare costs associated with seven diabetes-related complications. Diabet. Med. 20, 442–450 (2003). [ABSTRACT FROM AUTHOR]