OBJECTIVES To investigate the costs of dementia in Hungary, analyzing the distribution of direct and indirect costs, considering also the costs of caregivers. On basis of prevalence estimations from previous dementia studies we extrapolated the mean cost issues and estimated the burden of dementia for the population aged >50 in Hungary. METHODS A cross-sectional study of 88 consecutive patients with dementia and their caregivers was conducted in 2008 involving physicians and nurses of 3 GP and 1 outpatient practices. Resource Utilization in Dementia (RUD), Mini Mental State Examination (MMSE), and the health related quality of life EuroQoL (EQ-5D) questionnaires were applied. Using 2007 prices we established the proportion of the main cost-drivers and categorized cost-data by patients' age and MMSE scores. RESULTS Patients (59% female) were involved with clinical characteristics of mean MMSE 16.7 (SD 7.24), EQ-5D 0.401 (SD 0.327.), 59% were female, mean age was 78 years (SD 8.5). The average monthly direct costs per patient were 282 (SD 532) euros, mean indirect costs were 53 (SD 187) euros/patient/month. Total costs by age-groups (total sample, 65-74, 75-84 and 85 or more years) considering mental status (MMSE score level of 0-18, 19-24 and 25-30) within each were 176, 234, 108, 131 and 375, 588, 166, 67 and 418, 569, 262, 121 euros/patient/month, respectively. Dementia-related health services and indirect costs (income loss of caregivers) had the highest shares of the whole, 32%-32%for both. CONCLUSIONS Costs of increase by age and severity of the disease (measured by MMSE scores). At national level, in 2008 the estimated direct costs of dementia were 255 million euros with 48 million euros indirect costs. Trends show a remarkable growth in the number of the demented patients. Therefore, an increase of disease burden of dementia is expected in the future.