OBJECTIVES:  In recent years there has been a large increase in the number of morbidly obese persons subject to hospital surgery. In Portugal, 14% of the population of working age is obese. As in other countries these numbers have been rising and it is well known that obese individuals have an increased risk of morbidity and premature death from various diseases. We estimate the impact of obesity on the health sector by calculating the costs of hospital inpatient care associated with obesity in Portugal. METHODS: A prevalence-based cost of treatment approach is adopted. Hospital episode micro data are drawn from the National Health Service’s (NHS) DRG information system for 2008 (n=965 212). Besides episodes where the main diagnosis is obesity, population attributable fractions are calculated for 16 co-morbidities (CID-9-MC), including diabetes type 2, musculoskeletal diseases, cardiovascular conditions and some types of cancer. Relative risks are drawn from a recent meta-analysis of large-scale prospective studies and prevalence data from a nationally representative examination survey that recorded anthropometric data. Unit cost data are taken from an NHS database. RESULTS:  The hospital inpatient costs of obesity in NHS hospitals in 2008 are estimated as € 85.9 million. This corresponds to 0.92% of annual NHS expenditure. The three major contributors to this total are osteoarthritis (19.9%), obesity (15.4%) and ischemic heart disease (14.7%). If circulatory and cerebrovascular system diagnoses are grouped together, they become the largest contributors to total costs. CONCLUSIONS: The structure of costs by diagnosis is different to that commonly found in ambulatory care. Despite the sharp increase in the number of persons subject to obesity surgery the overall inpatient care costs have remained largely stable over time. There has been a large increase in the resources used to treat obesity directly, but a corresponding decrease in resources used to treat co-morbidities.