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Objective: Type II diabetes mellitus (T2DM) is prevalent in knee osteoarthritis (OA) patients undergoing total knee arthroplasty (TKA) and increases risk for prosthetic joint infection (PJI). We examined the cost-effectiveness of antibiotic prophylaxis (AP) before dental procedures to reduce PJI in TKA recipients with T2DM. Design: We used the Osteoarthritis Policy Model, a validated computer simulation of knee OA, to compare two strategies among TKA recipients with T2DM (mean age 68 years, mean BMI 35.4 kg/m2): 1) AP before dental procedures and 2) no AP. Outcomes included quality-adjusted life expectancy (QALE) and lifetime medical costs. We used published efficacy of AP. We report incremental cost-effectiveness ratios (ICERs) and considered strategies with ICERs below well-accepted willingness-to-pay (WTP) thresholds cost-effective. We conducted sensitivity analyses to examine the robustness of findings to uncertainty in model input parameters. We used a lifetime horizon and healthcare sector perspective. Results: We found that AP added 1.0 quality-adjusted life-year (QALY) and $66,000 for every 1000 TKA recipients with T2DM, resulting in an ICER of $66,000/QALY. In sensitivity analyses, reduction of the probability of PJI, T2DM-associated risk of infection, or attribution of infections to dental procedures by 50% resulted in ICERs exceeding $100,000/QALY. Probabilistic sensitivity analyses showed that AP was cost-effective in 32% and 58% of scenarios at WTP of $50,000/QALY and $100,000/QALY, respectively. Conclusions: AP prior to dental procedures is cost-effective for TKA recipients with T2DM. However, the cost-effectiveness of AP depends on the risk of PJI and efficacy of AP in this population.