Background: The cost of diabetes is high for both the individual and society. Future health-care planning requires patient-level diabetes-attributable health-care cost data that have not previously been available for Australia.Aim: To determine Australian national direct diabetes-attributable health-care costs for known type 2 diabetes in 2000 and project these to 2051.Methods: A total of 1294 patients with type 2 diabetes was recruited to the Fremantle Diabetes Study between 1993 and 1996. A bottom-up, prevalence-based approach using diabetes-attributable costs provided average annual per patient health-care costs (in year 2000 A$). Costs were extrapolated to 2051 using Australian type 2 diabetes prevalence figures and Australian Bureau of Statistics population projections, assuming that prevalence rates (i) remain at current levels and (ii) rise steadily.Results: Total annual direct diabetes-attributable health-care costs in 2000 in Australia for people >= 25 years with known type 2 diabetes were estimated at A$636 million. As a result of ageing, the number of people with type 2 diabetes will double between 2000 and 2051 with a 2.5-fold increase in diabetes-attributable health-care costs. If obesity and inactivity prevalence rates continue to rise, prevalence rates of type 2 diabetes will further increase. The number of people with type 2 diabetes in 2051 may be 3.5 times higher than in 2000 with a 3.7-fold cost increase.Conclusions: The financial burden of treating type 2 diabetes could quadruple by 2051 unless more is done to prevent type 2 diabetes and its complications. A smaller proportion of the population will have the capacity to fund these rising health-care costs.