BACKGROUND: This study investigated the cost-effectiveness of using fenofibrate to treat type 2 diabetes in Australia. The financial burden of type 2 diabetes mellitus is estimated to surpass AUD10 billion, mainly due to the cost of diabetic complications from diabetic neuropathy. Clinical evidence from the Fenofibrate Intervention and Event Lowering in Diabetes (FIELD) study demonstrated that fenofibrate can reduce the risk of amputation and other diabetes-related complications. METHODS: This study used a calibrated UKPDS model with an Australian diabetes cohort to simulate complications and deaths over a 20-year time horizon. The effectiveness of fenofibrate was assessed using the FIELD study. Total cost was calculated over the 20-year time horizon. Input data was obtained from the Australian Refined-Disease Related Groups and the Australian Pharmaceutical Benefits Scheme. RESULTS: The model estimated that fenofibrate is associated with lower complication costs, which save over AUD 4.6 million per 1,000 patients. The most significant savings were observed in amputations. The incremental cost-effectiveness ratio for fenofibrate treatment was estimated to be AUD 739/LY gained and AUD 1189/QALY gained. CONCLUSION: The use of fenofibrate in Type 2 diabetes patients is estimated to result in cost savings in an Australian setting due to fewer diabetes complications.