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Type 2 diabetes mellitus (T2DM) is a chronic disease with high-cost treatment. This study aimed to analyze the cost-effectiveness of T2DM treatment in hospitalized patients with complications of kidney and peripheral vascular disease (PVD) in Indonesia by focusing on patients of Health Social Security Agency (BPJS Kesehatan). An observational study was applied by collecting data retrospectively from patients’ medical record at the biggest public hospital in West Java Province, Indonesia. Two perspectives of payer and healthcare provider were applied to estimate the treatment cost. We considered following inclusion criteria: (i) Hospitalized T2DM patients without complication, with complications of kidney and PVD during 2014–2017; (ii) member of BPJS Kesehatan; (iii) >18 years old patients; and (iv) patients with complete medical record data. The results showed that the majority patients were female (56.72%), 45–64 years old (69.40%), and had a length of stay at 4–10 days (54.48%). The greatest contributions in the total treatment cost were found to be hospital room, medical services and medicines for the treatment of T2DM without complications, with complications of kidney and PVD, respectively. From the perspective of payer, the incremental cost-effectiveness ratios (ICERs) of T2DM treatment with complications of kidney and PVD would be IDR 215,723 and IDR 234,591 per 1 mg/dL blood glucose reduction, respectively. From the perspective of healthcare provider, the ICERs of T2DM treatment with complications of kidney and PVD would be IDR 166,289 and IDR 681,853 per 1 mg/dL blood glucose reduction in both perspectives (1 US$ = IDR 13,451). In a comparison with T2DM without complication, reducing 1 mg/dL blood glucose in T2DM treatment with complication of PVD would require higher cost than in T2DM treatment with complication of kidney from both perspectives. Full article