Objective: The UKPDS 34 and 51 showed that intensive blood glucose control with metformin is cost-saving and increases life expectancy in overweight type 2 diabetic patients in the United Kingdom. Diabetes is becoming an important health problem in urban China. This study addresses the effects and costs of intensive blood glucose control in this setting, aimed at supporting decision-making on the allocation of scarce resources. - Methods: A decision analytic model was developed to estimate the costs and effectiveness of intensive blood glucose control in overweight type 2 diabetes patients in Beijing, compared with usual care in accordance with clinical practice. The analysis was carried out from a health-care perspective. - Results: The base-case analysis (3% discount rate) shows that the average incremental costs of 11 years of intensive treatment with metformin are 126.6 K RMB (16.4 K US$) per quality-adjusted life year (QALY) gained. The incremental cost-effectiveness ratio (ICER) is sensitive to the costs of medication alternatives for metformin in the intensive treatment group and to the discount rate used (0%: 105.6 K RMB (13.7 K US$) per QALY gained; 5%: 171.0 K RMB (22.2 K US$) per QALY gained). After 20 and 30 years (lifetime) follow-up, the ICERs become increasingly favorable, 90.1 K RMB (11.7 K US$) and 74.3 K RMB (9.6 K US$), respectively. The ICER is most sensitive to the costs of medication alternatives for metformin in the intensive treatment group, and to the discount rate. - Conclusions: Interpretation of the findings depends on the maximum willingness to pay for a QALY in China, which has not officially been defined. If this would be three times the gross domestic product per capita, a value that has been suggested in the literature, lifetime intensive blood glucose control is likely to be cost-effective. Our findings differ from the UKPDS studies and emphasize that generalizing the results of studies across countries requires considerable adaptation to the local context.