Objective: To estimate the burden of diabetes mellitus (DM) and its complications in The Netherlands. Methods: The PHARMO Record Linkage System comprised among others linked drug dispensing, hospital and clinical laboratory data from approximately 2.5 million individuals in The Netherlands. Patients with DM (type 1 and type 2) were included in the study cohort from 2000 to 2004 if they used antidiabetic drugs or had HbA1c ≥ 6.5 mmol/L or had a hospitalization for DM or a diabetic complication in the measurement year or in the preceding year. Controls, defined as subjects without a diagnosis of DM and/or subjects not prescribed glucose-lowering medication, were 1:1 matched to patients with diabetes, on birth year, zip code, and gender. Complications (hospitalizations and dispensings for cardiovascular disease/eye problems/amputations) were classified into stages. Complications attributed to DM were estimated as complication stages 1 and 2 among patients minus those among controls. Drug costs were extrapolated to The Netherlands by direct standardization. Results: Among the total population in The Netherlands, the prevalence of DM increased from 2.8% in 2000 to 4.0% in 2004. Severe cardiovascular complications attributed to DM increased from 18,000 to 39,000 patients. Per DM patient the cost of direct treatment attributed to DM increased from 974 in 2000 to 1283 in 2004. Per 100 members of the total population, this increase was from 2764 in 2000 to 5140 in 2004. Most of these costs (65% in 2004) were because of hospitalizations. Conclusion: Drug treatment, hospitalizations, and cost attributed to diabetes mellitus have almost doubled between 2000 and 2004, but so did the "background" costs in the general population, perhaps because of preventive efforts.