The objective is to estimate the national economic costs associated with undiagnosed diabetes mellitus (UDM). UDM is defined as unknowingly having an elevated glucose level that meets the definition of diabetes. National Health and Nutrition Examination Survey (NHANES) data are used to estimate the prevalence of UDM. Because UDM cannot be directly observed in medical claims for analyzing per capita patterns of health care use, we analyze annual medical claims from a proxy population--people within 2 years of first diagnosis of diabetes. For a commercially insured population first diagnosed with diabetes in 2006 (n = 29,770), we compare their annual health care use in 2004 and 2005 to that of patients with no history of diabetes between 2004 and 2006 (n = 3.2 million). We combine estimates of UDM prevalence from NHANES with health care use patterns from the proxy population to estimate etiological fractions that reflect the portion of national health care use associated with UDM. Approximately 6.3 million adults in the United States have UDM in 2007. Annual per capita use of health care services for the UDM proxy population is higher than for a comparable group with no history of diabetes, but lower than for a comparable group with a history of diabetes. The estimated economic costs of UDM in 2007 is $18 billion ($2864 per person with UDM), including medical costs of $11 billion and indirect costs of $7 billion. Although the high prevalence of UDM makes it an important health issue to be studied, data limitations have contributed to a dearth of information on the health care use patterns and economic costs of UDM. By omitting UDM, estimates of the total national cost of diabetes are underestimated.