Abstract Background The EuroQoL five-dimensional instrument (EQ-5D) is the favoured preference-based instrument to measure health-related quality of life (HRQoL) in several countries. Two versions of the EQ-5D are available: the 3-level version (EQ-5D-3 L) and the 5-level version (EQ-5D-5 L). This study aims to compare specific measurement properties and scoring of the EQ-5D-3 L (3 L) and EQ-5D-5 L (5 L) in Indonesian type 2 diabetes mellitus (T2DM) outpatients. Methods A survey was conducted in a hospital and two primary healthcare centres on Sulawesi Island. Participants were asked to complete the two versions of the EQ-5D instruments. The 3 L and 5 L were compared in terms of distribution and ceiling, discriminative power and test-retest reliability. To determine the consistency of the participants’ answers, we checked the redistribution pattern, i.e., the consistency of a participant’s scores in both versions. Results A total of 198 T2DM outpatients (mean age 59.90 ± 11.06) completed the 3 L and 5 L surveys. A total of 46 health states for 3 L and 90 health states for 5 L were reported. The ‘11121’ health state was reported most often: 17% in the 3 L and 13% in the 5 L. The results suggested a lower ceiling effect for 5 L (11%) than for 3 L (15%). Regarding redistribution, only 6.1% of responses were found to be inconsistent in this study. The 5 L had higher discriminative power than the 3 L version. Reliability as reflected by the index score was 0.64 for 3 L and 0.74 for 5 L. Pain/discomfort was the dimension mostly affected, whereas the self-care dimension was the least affected. Conclusions This study suggests that the 5 L-version of the EQ-5D instrument performs better than the 3 L-version in T2DM outpatients in Indonesia, regarding measurement and scoring properties. As such, our study supports the use of the 5 L as the preferred health-related quality of life measurement tool. We did not do a trial but this study was approved by the Medical Ethics Committee of Universitas Gadjah Mada Yogyakarta, Indonesia (document number KE/FK/1188/EC, 12 November 2014, amended 16 March 2015).