Background: The economic burden of type 2 diabetes has not been adequately investigated in many low- and lower middle-income countries, including Bangladesh. The aim of this study was to estimate the cost-of-illness of type 2 diabetes and to find its determinants in Bangladesh. Methods: A cross-sectional study was conducted in 2017 to recruit 1253 participants with type 2 diabetes from six diabetes hospitals, providing primary to tertiary health care services, located in the northern and central regions of Bangladesh. A structured questionnaire was used for face-to-face interviewing to collect non-clinical data. Patients' medical records were reviewed for clinical data and hospital records were reviewed for hospitalisation data. Cost was calculated from the patient's perspective using a bottom-up methodology. The direct costs for each patient and indirect costs for each patient and their attendants were calculated. The micro-costing approach was used to calculate direct cost and the human capital approach was used to calculate indirect cost. Median regression analysis was performed to identify the determinants of average annual cost. Results: Among the participants, 54% were male. The mean (±SD) age was 55.1 ± 12.5 years and duration of diabetes was 10.7 ± 7.7 years. The average annual cost was US$864.7 per patient. Medicine cost accounted for 60.7% of the direct cost followed by a hospitalisation cost of 27.7%. The average annual cost for patients with hospitalisation was 4.2 times higher compared to those without hospitalisation. Being females, use of insulin, longer duration of diabetes, and presence of diabetes complications were significantly related to the average annual cost per patient. Conclusions: The cost of diabetes care is considerably high in Bangladesh, and it is primarily driven by the medicine and hospitalisation costs. Optimisation of diabetes management by positive lifestyle changes is urgently required for prevention of comorbidities and complications, which in turn will reduce the cost.