OBJECTIVES: To assess the cost-effectiveness of the WISDOM self-management intervention for type 2 diabetes compared with care as usual. DESIGN: We performed a difference-in-differences analysis to estimate differences in risk factors for diabetes complications between people in the WISDOM group (n = 25, 276) and a control group (n = 15, 272) using GP records. A decision analytic model was then used to extrapolate differences in risk factors into costs and outcomes in the long-term. SETTING: Participating GP practices in West Hampshire and Southampton, UK. PARTICIPANTS: All people diagnosed with type 2 diabetes between January 1990 and March 2020 (n=40,548). OUTCOMES: Diabetes-related complications, Quality Adjusted Life Years (QALYs) and costs to the English National Health Service at five years and lifetime. INTERVENTIONS: The WISDOM intervention included risk stratification, self-management education program to professionals and people with type 2 diabetes, and monitoring of key treatment targets. RESULTS: WISDOM was associated with less atrial fibrillation [p = 0.001], albuminuria [p = 0.002] and blood pressure [p = 0.098]. Among all people in the intervention group, WISDOM led to 51 [95%CI: 25; 76] QALYs gained and saved £278,036 [95%CI: -631,900; 176,392] in the first five years after its implementation compared with care as usual. During those people' lifetime, WISDOM led to 253 [95%CI: 75; 404] QALYs gained and cost saving of £126,380 [95%CI: -1,466,008; 1,339,628]. The gains in QALYs were a result of reduced diabetes-related complications through improved management of the associated risk factors. CONCLUSIONS: The WISDOM risk-stratification and education intervention for type 2 diabetes appears to be cost-effective compared to usual care by reducing diabetes complications.