Chronic kidney disease (CKD) affects up to 15% of the adult population and is strongly associated with other non-communicable chronic diseases including diabetes. However, there is limited information on a population basis of the relationship between CKD and health-related quality of life (HRQoL) and the consequent economic cost. We investigated this relationship in a representative sample in England using the 2010 Health Survey for England. Multivariable Tobit models were used to examine the relationship between HRQoL and CKD severity. HRQoL was converted to quality adjusted life year (QALY) measures by combining decrements in quality of life with reductions in life expectancy associated with increased disease severity. QALYs were adjusted for discounting and monetised using the UK threshold for reimbursement of 30,000 pound. The QALYs were then used in conjunction with forecasted prevalence to estimate the HRQoL burden associated with CKD among individuals with diabetes up to 2025. Individuals with more severe CKD had lower HRQoL compared to those with better kidney function. Compared to those with normal/low normal kidney function and stage 1 CKD, those with stage 2, stage 3 with albuminuria and stage 4/5 CKD experienced a decrement of 0.11, 0.18 and 0.28 in their utility index, respectively. Applying the UK reimbursement threshold for a QALY, the monetised lifetime burden of reduced HRQoL due to stage 2, stage 3 with albuminuria and stage 4/5 CKD were 103,734; pound 83,399; pound 125,335 pound in males and 143,582; pound 70,288; pound 203,804 pound in females, respectively. Utilizing the predicted prevalence of CKD among individuals with diabetes mellitus, the economic burden of CKD per million of individuals with diabetes is forecasted at approximately 11.4 pound billion in 2025. In conclusion, CKD has a strong adverse impact on HRQoL in multiple domains. The estimated economic burden of CKD among individuals with diabetes mellitus in the UK is projected to rise markedly over time.