Aim: To synthesise key outcomes data from cost-effectiveness studies in diabetes, in the UK setting, and describe a narrative for the evidence-base, in order to understand the direction that future health economics research in this field could be heading. Methods: The peer-reviewed literature was searched at http://www.pubmed.com for health economics analyses in diabetes in theUKsetting published between 1995 and 2008, using the keywords: “costs”, “cost-effectiveness”, “diabetes”, “UK”. Studies on screening for diabetes or prevention of diabetes were excluded, along with studies that looked purely at cost of diabetes treatment or monitoring. Results: There were over 350 hits on MEDLINE. A total of 23 articles were identified and reviewed. 18 studies were in type 2, two in type 1 and three studies in both types 1 and type 2 diabetes. All studies evaluated treatment from the perspective of the NHS, with the time horizons varying from 12 months to patient lifetimes. 13 studies estimated quality-adjusted life expectancy (QALE). The majority of studies used health economics modelling techniques to project clinical benefit and cost outcomes beyond the context of clinical trials, with Markov-type models predominating. The United Kingdom Prospective Study of Diabetes was the most frequently cited source of clinical effectiveness and cost data. Most studies were funded by the pharmaceutical industry and evaluated more expensive products, rather than cheaper generic therapies such as human insulin and metformin monotherapy. Conclusion: Treatment-to-target in patients with diabetes in the UK is generally cost-effective and sometimes cost-saving vs. standard care. Ongoing health economics analysis in diabetes is essential as new clinical data are published. Future analysis of clinical and cost outcomes in diabetes could be expected to look beyond the impact of interventions on HbA1c in isolation, as manufacturers seek to differentiate innovative products in the market. Furthermore, it is anticipated that the competitiveness in the market for interventions in diabetes will lead to future cost-effectiveness analysis taking more interest in comparisons of off-patent medication and generic, fixed-dose combination therapies.