AIMS/HYPOTHESIS: The aim of the present study was to estimate the prevalence and healthcare costs of diabetic retinopathy (DR). METHODS: This population-based study included all residents (n = 251,386) in the catchment area of the eye clinic of Linköping University Hospital, Sweden. Among patients with diabetes (n = 12,026), those with and without DR were identified through register data from both the Care Data Warehouse in Ostergötland, an administrative healthcare register, and the Swedish National Diabetes Register. Healthcare cost data were elicited by record linkage of these two registers to data for the year 2008 in the Cost Per Patient Database developed by Ostergötland County Council. RESULTS: The prevalence of any DR was 41.8% (95% CI 38.9-44.6) for patients with type 1 diabetes and 27.9% (27.1-28.7) for patients with type 2 diabetes. Sight-threatening DR was present in 12.1% (10.2-14.0) and 5.0% (4.6-5.4) of the type 1 and type 2 diabetes populations respectively. The annual average healthcare cost of any DR was 72 (53-91). Stratified into background retinopathy, proliferative DR, maculopathy, and the last two conditions combined, the costs were 26 (10-42), 257 (155-359), 216 (113-318) and 433 (232-635) respectively. The annual cost for DR was 106 000 per 100,000 inhabitants. CONCLUSIONS: This study presents new information on the prevalence and costs of DR. Approximately one-third of patients with diabetes have some form of DR. Average healthcare costs increase considerably with the severity of DR, which suggests that preventing progression of DR may lower healthcare costs.