Aim: When glycaemic control for people with type 2 diabetes is not achieved with metformin and sulfonylurea alone, adding another oral anti-diabetes drug, such as a sodium–glucose co-transporter 2 (SGLT2) or dipeptidyl peptidase-4 (DPP-4) inhibitor, is an alternative to starting insulin. The aim of this study is to determine the cost-effectiveness of dapagliflozin (an SGLT2 inhibitor) compared with DPP-4 inhibitors when added to metformin and sulfonylurea in people with type 2 diabetes in the Netherlands. Methods: A cost–utility analysis is performed using the Cardiff diabetes model, a fixed-time increment stochastic simulation model informed by ‘United Kingdom Prospective Diabetes Study 68’ risk equations. The base-case analysis uses a 40-year time horizon, a Dutch societal perspective and differential discounting (4% for costs, 1.5% for effects). Inputs are obtained from the literature and Dutch price lists. Univariate and probabilistic sensitivity analysis are performed. Results: Dapagliflozin is dominant compared with DPP-4 inhibitors, resulting in a €990 cost saving and a 0.28 quality-adjusted life year gain over 40 years. Cost savings are associated mainly with treatment costs and a reduced incidence of micro- and macrovascular complications, among others nephropathy, myocardial infarction and stroke. Results are robust to changes in input parameters. Conclusions: Dapagliflozin is a cost-saving alternative to DPP-4 inhibitors when added to metformin and sulfonylurea. The incidence of micro- and macrovascular complications is lower for people treated with dapagliflozin. Uncertainty around this outcome is low.