Objective: Diabetes mellitus (DM) is a major cause of disability, morbidity and mortality Worldwide. The objective of this study is to evaluate the pharmacoeconomic (PE) direct health-care cost in Type 2 diabetes with complications and diabetes alone: A cost of illness study.Methods: A prospective observational study was conducted for 1 year at the care diabetes center, Warangal. The enrolled patients were followed and the information collected contains: Total direct costs, which include direct medical costs and direct nonmedical cost. The data observed was analyzed for the average cost incurred in treating the diabetic patient. Results:The total average costs per diabetic patient without complications was Rs. 8695.7±1341, this includes the average direct medical cost Rs. 6366.50±561.12, the average laboratory cost Rs. 1368.84±64.8, the average direct nonmedical cost was Rs. 960.36±14.04 compared to those with DM complications, the total average cost was Rs. 12960.73±549.96 for macrovascular complications, Rs. 11039.11±265.36 for microvascular complications. To treat diabetes with comorbidities which include both micro and macro complications the total average cost was Rs. 16658.13±1393.44, the average direct medical cost was Rs. 14071.77±2884.68, the average laboratory cost Rs. 1628.04±51, the average direct nonmedical cost was Rs. 958.32±13.08. The costs were found to increase progressively with the increase in the number of complications. Costs also vary significantly across the types of complications. Conclusion:Our study concludes that the cost of diabetes with complications resulted about 2 times higher than compared to diabetes alone.