A systematic review of the literature was conducted to identify articles on the economics of type 2 diabetes mellitus. Articles were classified into two main categories: cost/burden-of-illness studies of type 2 diabetes and economic evaluations of type 2 diabetes interventions. This systematic review was supplemented by an overview of the findings relating to economic evaluations of associated diabetic complications. A number of conclusions emerge from this review, the most important of which is that intensive treatment of patients with type 2 diabetes appears to be relatively cost effective compared with more conservative strategies. This finding reflects the cost offsets that arise from the range and degree of complications attributable to diabetes. Primary prevention of type 2 diabetes also appears to be cost effective, particularly in high-risk groups. The evidence on screening for type 2 diabetes is less conclusive and further economic analysis is required.