Aims/hypothesis The aim of the present study was to investigate resource utilisation and associated costs in patients with diabetic foot ulcers and to analyse differences in resource utilisation between individuals with or without peripheral arterial disease (PAD) and/or infection. Methods Data on resource utilisation were collected prospectively in a European multicentre study. Data on 1,088 patients were available for the analysis of resource use, and data on 821 patients were included in the costing analysis. Costs were calculated for each patient by multiplying the country-specific direct and indirect unit costs by the number of resources used from inclusion into the study up to a defined endpoint. Country-specific costs were converted into purchasing power standards. Results Resource use and costs varied between outcome groups and between disease severity groups. The highest costs per patient were for hospitalisation, antibiotics, Diabetologia (2008) amputations and other surgery. All types of resource utilisation and costs increased with the severity of disease. The total cost per patient was more than four times higher for patients with infection and PAD at inclusion than for patients in the least severe group, who had neither. Conclusions/interpretation Important differences in resource use and costs were found between different patient groups. The costs are highest for individuals with both peripheral arterial disease and infection, and these are mainly related to substantial costs for hospitalisation. In view of the magnitude of the costs associated with inhospital stay, reducing the number and duration of hospital admissions seems an attractive option to decrease costs in diabetic foot disease.