OBJECTIVES: To assess direct medical costs associated to hospital treatment of hip fractures in the elderly in a public hospital in Rio de Janeiro, Brazil and their association with demographic and clinical variables. METHODS: Observational, prospective study to assess resource utilization and direct medical costs associated to elderly hip fracture hospitalization in 2007 and 2008, under the health care provider perspective. A standard data collection instrument was used to register identified resources during prospective medical charts review. The resource utilization was converted into Brazilian Real (BRL), based on 2010 prices. Descriptive analysis of costs and resource utilization and their association with clinical and demographic variables were performed. RESULTS: Eighty two patients were included, 81.7% female, mean age of 76.96 years, hospitalization mean time of 12.66 days. Median total costs per patient were 3,064.76 BRL (IC95%: 2,817.63 – 3,463.98). Clinical hospitalization and surgical procedure were responsible for 65.61% and 24.94% of costs, respectively. Median costs for patients submitted to surgical procedure until the fourth day of hospitalization were lower than median costs for patients submitted after the fourth day (2,136.45 BRL and 3,281.45 BRL, respectively, p<0.00001). A significant difference in average costs per type of surgical procedure was also observed. Variables sex, age over 80 years, fracture site and presence of cardiovascular disease were not associated with statistically significant differences in total costs. CONCLUSIONS: Clinical hospitalization and surgical procedure were the main cost components observed. Higher cost associated to inpatient treatment of hip fractures in patients who performed surgery after the fourth day of hospitalization added to available evidence about an increased risk of mortality after this period reinforce the need of priority establishment to treat elderly patients with hip fracture.