Many patients with type 2 diabetes mellitus (T2DM) on insulin therapy have inadequate glycaemic control. In such cases, Dutch guidelines recommend unlimited up-titration of insulin, yet in practice many patients never reach their glycaemic target. Clinical evidence shows that dapagliflozin-a highly selective sodium-glucose cotransporter 2 inhibitor-meets a need for these patients, i.e. by reducing glycated haemoglobin levels and bodyweight. We estimated the cost effectiveness and cost utility of adding dapagliflozin to insulin compared with not adding dapagliflozin in patients with T2DM who have inadequate glycaemic control while on insulin. The cost effectiveness of dapagliflozin was estimated using the Cardiff Diabetes Model, using direct comparative efficacy data from a randomized placebo-controlled trial (ClinicalTrials.gov identifier NCT00673231). In this trial, up-titration of insulin was allowed in case of severe glycaemic imbalance. Risk factor progression and the occurrence of future vascular events were estimated using the United Kingdom Prospective Diabetes Study 68 risk equations. Costs and utilities were derived from the literature. The analysis was conducted from the societal perspective, simulating the remaining lifetime of the patients. The overall incidence of macro- and microvascular complications was lower, and life expectancy was greater (19.43 versus 19.35 life-years [LYs]) in patients receiving dapagliflozin than in those not receiving dapagliflozin. Patients in the dapagliflozin arm obtained an incremental benefit of 0.42 quality-adjusted life-years (QALYs). The lifetime incremental cost per patient in the dapagliflozin arm was €2,293, resulting in an incremental cost-effectiveness ratio of €27,779 per LY gained and an incremental cost-utility ratio of €5,502 per QALY gained. Sensitivity and scenario analyses showed that the results were insensitive to variations in modelling assumptions and input variables. Dapagliflozin in combination with insulin was estimated to be a cost-effective treatment option for patients with T2DM whose insulin treatment regimen does not provide adequate glycaemic control in a Dutch healthcare setting.