To evaluate the cost and effectiveness of intensive insulin therapy for type 2 diabetes on the prevention of diabetes complications in Japan, we performed economic evaluation based on a randomized controlled trial. A total of 110 patients with type 2 diabetes were randomly assigned into two groups, a multiple insulin injection therapy (MIT) group or a conventional insulin injection therapy (CIT) group, and were followed-up for 10 years. Economic evaluation (cost-consequences analysis) was applied to evaluate both health and economic outcomes. As outcome measures for effectiveness of intensive insulin therapy, the frequency of complications, such as retinopathy, nephropathy, neuropathy, macrovascular event, and diabetes-related death, was used. For estimating costs, a viewpoint of the payer (the National Health Insurance) was adopted. Direct medical costs associated with diabetes care during 10 years were calculated and evaluated. In a base case analysis, all costs were discounted to the present value at an annual rate of 3%. Sensitivity analyses were carried out to assess the robustness of the results to changes in the values of important variables. MIT reduced the relative risk in the progression of retinopathy by 67%, photocoagulation by 77%, progression of nephropathy by 66%, albuminuria by 100% and clinical neuropathy by 64%, relative to CIT. Moreover, MIT prolonged the period in which patients were free of complications, including 2.0 years for progression of retinopathy (P<0.0001), 0.3 years for photocoagulation (P<0.05), 1.5 years for progression of nephropathy (P<0.01) and 2.2 years for clinical neuropathy (P<0.0001). The total cost (discounted at 3%) per patient during the 10-year period for each group was $30310 and 31525, respectively. The reduction of total costs in MIT over CIT was mainly due to reduced costs for management of diabetic complications. Our results show that MIT is more beneficial than CIT in both cost and effectiveness. Therefore, MIT is recommended for the treatment of type 2 diabetic patients who require insulin therapy as early as possible from the perspective of both patients and health policy.