To measure the economic burden associated with diabetes mellitus in Latin America and the Caribbean. Prevalence estimates of diabetes for the year 2000 were used to calculated direct and indirect costs of diabetes mellitus. Direct costs included costs due to drugs, hospitalizations, consultations and management of complications. The human capital approach was used to calculate indirect costs and included calculations of forgone earnings due to premature mortality and disability attributed to diabetes mellitus. Mortality and disability attributed to causes other than diabetes were subtracted from estimates to consider only the excess burden due to diabetes. A 3% discount rate was used to convert future earnings to current value. The annual number of deaths in 2000 caused by diabetes mellitus was estimated at 339,035. This represented a loss of 757,096 discounted years of productive life among persons younger than 65 years (> billion US dollars). Permanent disability caused a loss of 12,699,087 years and over 50 billion US dollars, and temporary disability caused a loss of 136,701 years in the working population and over 763 million US dollars. Costs associated with insulin and oral medications were 4720 million US dollars, hospitalizations 1012 million US dollars, consultations 2508 million US dollars and care for complications 2,480 million US dollars. The total annual cost associated with diabetes was estimated as 65,216 million US dollars (direct 10,721 US dollars; indirect 54,496 US dollars). Despite limitations of the data, diabetes imposes a high economic burden to individuals and society in all countries and to Latin American and the Caribbean as whole.