Diabetes is a common metabolic disorder with increasing burden in Thailand. The chronic nature along with associated complications makes the disease very costly. In Thailand, there exist some studies on cost of diabetes; however, those studies estimated the cost either from provider or from patient perspective. In order to capture the complete picture of economic burden caused by diabetes, using prevalence-based approach; the present study estimated the cost of illness of diabetes from societal perspective, the broadest viewpoint covering all costs irrespective of who incur them. Data were collected from 475 randomly selected diabetic patients who received treatment from Waritchaphum hospital in Sakhon Nakhon province of Thailand during 2007–2008 with a response rate of 98%. A micro-costing approach was used to calculate the cost. The direct medical cost was calculated by multiplying the quantity of medical services consumed by their unit costs while indirect cost was calculated by using human capital approach. The total cost of illness of diabetes for 475 study participants was estimated as USD 418,696 for the financial year 2008 (1 USD = 32 THB). Of this, 23% was direct medical cost, 40% was direct non-medical cost and 37% was indirect cost. The average cost of illness per diabetic patient was USD 881.47 in 2008 which was 21% of per capita gross domestic product of Thailand. Existence of complications increased the cost substantially. Cost of informal care contributed 28% of total cost of illness of diabetes. Therefore, the disease not only affected the individual but also the family members, friends and neighbours. The economic and social burden of the disease therefore emphasises the need for initiatives to prevent the disease prevalence and counselling to the diabetic patients to prevent the progression of the disease and its devastating complications.