OBJECTIVES: A patient suffering from end stage renal disease (ESRD) has two treatment options, lifelong dialysis or renal transplantation. The aim of this review is to determine economic cost of illness associated with renal transplantation and dialysis in ESRD in the United States (US). METHODS: The information was retrieved from databases including Medline, EMBASE, United States Renal Data System (USRDS), WHO and relevant grey literature. Studies reporting data for cost associated with transplantation and dialysis in ESRD in the US were included. RESULTS: In 2007, haemodialysis (HD) was initiated in 99,886 patients, peritoneal dialysis (PD) in 6376 patients and transplantation in 2500 patients in the US. Total Medicare costs associated with these were $17.6 billion for HD, $949 million for PD and $1.9 billion for transplantation (USRDS 2009). Unadjusted average annual Medicare expenditure (2004 US$) for PD and HD as first modalities was $53,277 and $72,189 respectively (Shih 2005). Patients with HD were twice as likely to be hospitalised over a 12 month period compared to matched PD patients. The median health care costs associated with hospitalisation were $173,507 for HD patients vs. $129,997 for PD patients (Berger 2009). The mean length of stay was significantly less for PD with 6.57 days (p<0.0001) vs. 7.25 days for HD (Walker 2009). The mean cost of treating S. aureus bacteraemia in HD patients, including readmissions and outpatient costs, was $24,034 per episode (Engemann 2005). Over a 25 year time horizon, renal transplantation resulted in significant cost savings with a cost of $376,577/patient and life expectancy of 7.4 years compared to $568,670/patient and life expectancy of 6.7 years with long term dialysis (Quinn 2007). CONCLUSIONS: Renal transplantation results in significant cost savings compared to long term dialysis. The total health care costs associated with haemodialysis are higher compared to peritoneal dialysis.