Objective: Recent estimates of cost of asthma among children in the USA are not available. The objective of this study was to estimate the incremental direct medical expenditures of treating asthma among children in the USA. Methods: Retrospective analysis was conducted using the 2004 Medical Expenditure Panel Survey (MEPS) data. Asthmatic children (age <18 years; n=968) were identified as those with International Classification of Diseases (ICD)-9 diagnosis codes for asthma or those that had a self-report of having asthma in 2004. Separate regression models were developed for total expenditures and expenditures for various categories of resource use adjusting for age, gender, race, ethnicity, education, geographic region, insurance status and number of medications used (proxy for comorbidity). Given the skewed distribution of expenditure variables, multiple model specifications including ordinary least squares regression, generalized linear model (GLM) with Poisson, gamma and negative binomial variance functions were evaluated. Results: The prevalence of current asthma among children in 2004 was estimated at 9.09%, i.e., 6.7 million persons (95% CI: 8.27% to 9.99%) in the U.S. A majority of children with asthma were male (61.6%), white (68.1%), and insured (95.2%) with mean age of 8.9±0.25 years and education of 2.4±0.17 years. Children with asthma had 69% higher total expenditures than non-asthmatics after controlling for covariates (RR: 1.69; p<0.0001). The annual adjusted mean incremental total expenditure associated with asthma was $661.7 (SE: $159.3; p <0.0001) per person. Medications accounted for the largest proportion of the total expenditures estimated at $197.9 (SE: $28.8; p <0.0001), followed by physician office visits at $162.3 (SE: $57.7; p=0.005) and inpatient visits at $105.0 (SE: $75.9; p=0.0167). Conclusion: Given the prevalence of asthma in children and its associated incremental expenditures, the annual direct medical expenditure for treating asthma in children is estimated at approximately $4.4 billion in 2005 U.S. dollars.