We examined the cost-effectiveness of a care coordination/home telehealth (CCHT) programme for veterans with diabetes. We conducted a retrospective, pre-post study which compared data for a cohort of veterans (n = 370) before and after the introduction of the CCHT programme for two periods of 12 months. To assess the cost-effectiveness, we converted the patients' health-related quality of life data into Quality Adjusted Life Year (QALY) utility scores and used costs to construct incremental cost-effectiveness ratios (ICERs). The overall mean ICER for the programme at one-year was $60,941, a value within the commonly-cited range of cost-effectiveness of $50,000-100,000. The programme was cost-effective for one-third of the participants. Characteristics that contributed to cost-effectiveness were marital status, location and clinically relevant co-morbidities. By targeting the intervention differently in future work, it may become cost-effective for a greater proportion of patients.