The purpose of this study was to determine the incidence of non-traumatic lower extremity amputations (LEAs) in diabetic and non-diabetic subjects in Madrid, Spain, and their direct cost. All patients who underwent LEAs between the 1st of January 1994 and the 31st of December 1996, and who had lived in area 7 of the city (569,307 inhabitants) for at least the last 6 months, were identified through operating theatre records cross-checked with Vascular Surgery Department discharge records. In addition, the direct cost of LEAs per year was estimated, taking into account the length of the hospital stay, the period of rehabilitation in the outpatient clinic after discharge, and the use of artificial limbs and their maintenance. The incidence of LEAs was 1.6 (95% CI: 1.1-2.2) per 10(5) non-diabetic subjects and 46.1 (95% CI: 34.5-57.6) per 10(5) diabetic patients. Relative risk was 28. Total direct costs associated with LEAs per year were US$ 56,131 in the diabetic population and US$ 30,765 in the non-diabetic population. Thus, potential cost savings associated with excess amputations in the diabetic population was estimated at US$ 541,353 per year of US$ 94,736 per 10(5) inhabitants. It is concluded that the incidence of LEAs in both diabetic and non-diabetic populations in area 7 is the lowest reported in European countries. The potential cost savings per 10(5) inhabitants and per year is estimated at US$ 94,736.