OBJECTIVES: This study aims to measure the costs of treating terminal patients in Belgian hospitals and in nursing homes from the health care payer perspective. Also, this study compares the costs of palliative care with those of usual care. METHODS: A multi-centre, retrospective cohort study enrolled patients in acute wards and in palliative care units from a representative sample of hospitals and from a representative sample of nursing homes. Health care costs included fixed costs and charges relating to medical fees, pharmacy and other charges. Data sources consisted of hospital and nursing home accountancy data and patient invoice data. The price year was 2007/2008. RESULTS: Six hospitals and nineteen nursing homes participated in the study, generating a total of 327 patients. Mean hospital costs per patient per day amounted to €391 (± €156). Mean hospital costs of patients receiving usual care in an acute ward (€340 ± 143) exceeded costs of palliative care in an acute ward (€283 ± 109) (p = 0.025). Mean nursing home costs amounted to €3243 (± 2700) per patient during the final month of life. Mean nursing home costs per patient of €3822 (± 3232) for patients receiving usual care were higher than costs of €2456 (± 2,117) for patients receiving palliative care (p = 0.068). CONCLUSIONS: This study suggests that palliative care models in acute hospital wards and in nursing homes need to be supported because such care models appear to be less expensive than usual care and because such care models are likely to better reflect the needs of terminal patients.