OBJECTIVES Recent estimates of cost of otitis media (OM) among children in the United States are not available. The objective of this study was to estimate the incremental direct medical expenditures of treating OM among children in the United States. METHODS Retrospective analysis was conducted using the 2005 Medical Expenditure Panel Survey (MEPS) data. Among all children (age<18 years; n=9691), children with OM were identified using International Classification of Diseases (ICD)-9 diagnosis codes 381 or 382 for OM. Incremental total expenditures associated with OM was estimated using a regression model 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 OM among children in the US was estimated at 11.08%, i.e., 8.15 million persons (95% CI: 10.28% to 11.94%). A majority of children with OM were male (52.3%), white (85.7%), and insured (97.3%) with mean age of 5.2±0.16 years and education of 1.0±0.09 years. In unadjusted analysis among patients with OM, inpatient visits was the largest proportion of the total expenditures at $708.97 (SE: $384.25), followed by physician office visits at $646.35 (SE: 48.07), outpatient visits at $370.88 (SE: $167.97), and prescription medications at $348.39 (SE: $122.26). After controlling for covariates, children with OM had 25% higher total expenditures than those without OM (Estimate: 1.25; p=0.024). The annual adjusted mean incremental total expenditure associated with OM was $245.6 (SE: $117.4; p=0.036) per person. CONCLUSIONS Given the prevalence of OM in children and its associated incremental expenditures, the annual direct medical expenditure for treating OM in children is estimated at approximately $2 billion in 2007 US dollars.