Background: Preference-based measures of health (PBMH) provide 'preference' or 'utility' weights that enable the calculation of QALYs for the economic evaluations of interventions. The Diabetes Utility Index® (DUI) was developed as a brief, self-administered, diabetes mellitusspecific PBMH that can efficiently estimate patient-derived health state utilities. Objective: To describe the development of the valuation function for the DUI, and to report the validation results of the valuation function. Methods: Multi-Attribute Utility Theory (MAUT) was used as the framework to develop a valuation function for the DUI. Twenty of 768 possible health states of the DUI classified as anchor states, single-attribute level states including corner states, and marker states were selected and described for preference elicitation interviews. Visual analogue scale and standard gamble (SG) exercises were used to measure preferences from individuals with diabetes recruited from primary care and community settings in and around Morgantown, WV, USA for the 20 health states defined by combinations of DUI attributes and severity levels. Data collected in the interviews were used to develop a valuation function that calculates utilities for the DUI health states and calculates attribute-level utilities. A validation survey of the valuation function was conducted in collaboration with the West Virginia University (WVU) Diabetes Institute. Results: A total of 100 individuals with diabetes were interviewed and their preferences for various DUI health states measured. From data generated in the interviews, a DUI valuation function was developed on a scale where 1.00 = perfect health (PH) and 0.00 = the all worse 'pits' state, and adjusted to yield utilities on the conventional scale 1.00 =PH and 0.00 = dead. A total of 396 patients with diabetes who received care at WVU clinics completed a DUI mail validation survey (response rate = 33%). Clinical data consisting of International Classification of Diseases, 9th edition, diagnosis codes and glycosylated haemoglobin (HbA 1c) values for the respondents were merged with their responses to the DUI. The utilities calculated by the scoring function of the DUI compared favourably to cardinal SG utilities for three DUI health states for which both assessments were available. The DUI utility function slightly underestimated actual SG utilities for mild and moderate health states (mean absolute difference = 0.05). There was a small but significant correlation between DUI utility scores and average past year HbA1c values (r=-0.30; p<0.001). Respondents with two or more complications had significantly lower DUI utilities than those with no complications (p<0.001) or one complication (p = 0.015). Insulin users had significantly lower DUI utilities than non-users (p<0.001), and those with HbA1c values <7% had significantly higher DUI utilities than those with HbA1c values of ≥7% (p<0.001). No significant association was found between DUI scores and age or sex. Conclusion: These results show evidence of the feasibility and validity of the DUI. Further research is suggested to demonstrate the generalizability of these findings, to study the responsiveness of the DUI, and to examine the clinical meaningfulness of DUI change scores.