Aim To undertake a cost‐effectiveness analysis of dapagliflozin in treating high‐risk patients with type 2 diabetes mellitus (T2DM), using both directly observed events in the DECLARE‐TIMI 58 trial and surrogate risk factors to predict endpoints not captured within the trial. Methods An established T2DM model was adapted to integrate survival curves derived from the DECLARE‐TIMI 58 trial, and extrapolated over a lifetime for all‐cause mortality, hospitalization for heart failure, stroke, myocardial infarction, hospitalization for unstable angina, and end‐stage kidney disease. The economic analysis considered the overall DECLARE trial population, as well as reported patient subgroups. Total and incremental costs, life‐years and quality‐adjusted life‐years associated with dapagliflozin versus placebo were estimated from the perspective of the UK healthcare payer. Results In the UK setting, treatment with dapagliflozin compared to placebo was estimated to be dominant, with an expected increase in quality‐adjusted life‐years from 10.43 to 10.48 (+0.06) and a reduction in lifetime total costs from £39 451 to £36 899 (−£2552). Across all patient subgroups, dapagliflozin was estimated to be dominant, with the greatest absolute benefit in the prior heart failure subgroup (incremental lifetime costs −£4150 and quality‐adjusted life‐years +0.11). Conclusions The results of this study demonstrate that dapagliflozin compared to placebo appears to be cost‐effective, when considering evidence reported from the DECLARE‐TIMI 58 trial, at established UK willingness‐to‐pay thresholds. The findings highlight the potential of dapagliflozin to have a meaningful impact in reducing the economic burden of T2DM and its associated complications across a broad T2DM population.