Background: Diabetes Mellitus Type II (T2DM) is a major and growing medical, social and economic burden in the East-Asian country of Cambodia. However, no economic modelling has been done to predict the number of cases and the budget impact. Objective: This paper forecasts the epidemiological and economic consequences of T2DM in Cambodia. The Ministry of Health and related donor agencies are supported to select the most cost-effective interventions against the disease. At the same time this paper demonstrates the relevance and potential of health economic modelling for least developed countries. Methods: We developed a Markov-Model for the specific situation of Cambodia. Data was taken from the scientific literature, grey literature in Cambodia and key-informant interviews. Results: The number of people living with T2DM is steadily increasing from 145,000 in the year 2008 to 264,000 in the year 2028 (+82 %). In the year 2008 the diagnosed T2DM patients would incur costs of some 2 million US$ to cover all of diabetes treatment. 57 % of this amount would have to be spent for OAD-therapy, the rest for insulin therapy. In the year 2028 this amount will have grown to some 4 million US$. If all patients (incl. non-diagnosed) had to be paid-for the respective figure would be 5.5 million and 11 million US$. Screening for T2DM is only cost-effective if the sensitivity of the test is high while the unit price is low. The results of this simulation call for targeting the high-risk groups. However, an increased availability of Oral Anti-Diabetic and Insulin Therapy is highly cost-effective. Discussion: Type 2 Diabetes Mellitus is a major public health challenge in Cambodia. The simulations clearly indicate that prevention and treatment of this disease is highly cost-effective. However, not everything that is cost-effective might be affordable in Cambodia. This country will require external support to ease the growing burden of T2DM.