Diabetes is becoming one of the major public health problems because a great proportion of the healthcare expenditure has been spent on the treatment of its associated morbidity and mortality. Diabetes is also a major cause of premature mortality, stroke, cardiovascular disease, peripheral vascular disease, congenital malformations as well as long- and short-term disability. In addition, persons with diabetic complications have a lower quality of life compared with persons without diabetes. The goal of this paper is to review the studies on the costs of diabetes, to identify the strengths and limitations of currently available diabetes cost studies, and to identify future research areas that will help us to better understand the economic burden of diabetes. The economic burden of diabetes mellitus is enormous in the world. Cost or illness estimates are often cited as an important element in the choices made regarding diabetes care and management. Studying these economic aspects presents several challenges, such as collecting the appropriate epidemiological and cost data, determining the diabetes attributable factors for premature morbidity and mortality, and determining methods to account for premature morality, disability, and reduced quality of life. The cost to care for diabetes puts a tremendous burden on both the patient and the payer. The direct cost of diabetes increased from 1.7 billion US dollars in 1969 to 44.4 billion US dollars in 1997. Several studies over the years have found that indirect costs related to diabetes are higher than direct. Indirect costs during 28 years increased 33 times, from 1.6 billion US dollars in 1969 to 54.1 billion US dollars in 1997. The expenses of one diabetic patient highly vary in different countries: from 13 US dollars in Bangladesh to 11,157 US dollars in USA per one year. Most of diabetes expenditure is used to pay for inpatient services (60-85%); the biggest part of it is incurred because of late diabetes complications (70%). Diabetes accounted to 3-12% of total healthcare expenditure in different countries. In this era of limited resources and escalating costs, it is critical to have an understanding of the economics of diabetes in order to develop and implement sound public health and prevention policies.