Aims/hypothesis We estimated the cost-effectiveness of atorvastatin treatment in the primary prevention of cardiovascular disease in patients with type 2 diabetes using data from the Collaborative Atorvastatin Diabetes Study (CARDS). Subjects and methods A total of 2,838 patients, who were aged 40 to 75 years and had type 2 diabetes without a documented history of cardiovascular disease and without elevated LDL-cholesterol, were recruited from 32 centres in the UK and Ireland and randomly allocated to atorvastatin 10 mg daily (n=1,428) or placebo (n=1,410). These subjects were followed-up for a median period of 3.9 years. Direct treatment costs and effectiveness were analysed to provide estimates of cost per endpoint-free year over the trial period for alternative definitions of endpoint, and of cost per life-year gained and cost per quality-adjusted lifeyear (QALY) gained over a patient's lifetime. Results Over the trial period, the incremental cost-effectiveness ratio (ICER) was estimated to be £7,608 per year free of any CARDS primary endpoint; the ICER was calculated to be £4,896 per year free of any cardiovascular endpoint and £4,120 per year free of any study endpoint. Over lifetime, the incremental cost per life-year gained was £5,107 and the cost per QALY was £6,471 (costs and benefits both discounted at 3.5%). Conclusions/interpretation Primary prevention of cardiovascular disease with atorvastatin is a cost-effective intervention in patients with type 2 diabetes, with the ICER for this intervention falling within the current acceptance threshold (£20,000 per QALY) specified by the National Institute for Health and Clinical Excellence (NICE).