OBJECTIVES: To estimate the economic burden associated with acute exacerbations of chronic obstructive pulmonary disease (COPD) in Tianjin, China. METHODS: Data from the Tianjin Urban Employee Basic Medical Insurance (UEBMI) database (2003-2007), including inpatient claims for medical services and prescription drugs from 30% random sample of enrollees, were used.  Acute exacerbation was defined as a COPD episode leading to hospitalization. Hospitalizations of adult patients with primary diagnosis of COPD and discharge dates between 2003 and 2007 were selected and the latest COPD hospitalization for each patient was selected to estimate healthcare utilization and costs associated with COPD acute exacerbation. All costs were estimated in 2007 U.S. dollars using the Medical Service Consumer Price Index (CPI) in China and an exchange rate of 7.598 Chinese Yuan to 1 USD in 2007. RESULTS: A total of 1321 COPD patients with acute exacerbations were identified, with a mean age of 71.1 years and 41.3% female.  Approximately 38.4% of all patients had at least one complication, 21.3% had cor pulmonale, 19.8% had pneumonia, 11.0% had congestive heart failure, and 4.9% had bronchiectasis. About 58.2% hospitalizations occurred in tier-3 hospitals, 36.2% in tier-2 hospitals and 5.6% in tier-1 hospitals. The mean length of stay was 16.8 days per hospitalization.  About 92.9% patients received antiathmatic, 75.2% received expectorant, and 24.6% received antitussive during hospitalization. The mean total cost per acute exacerbation/hospitalization was $1323 with 74.1% covered by UEBMI and 25.9% by patients. Medication costs accounted for 56.3% of the total inpatient costs. Examination costs and bed costs accounted for 16.4% and 4.5%, respectively.  CONCLUSIONS: Complications of COPD are common among patients with COPD exacerbations. The majority of patients with COPD exacerbations are treated in tier-3 hospitals. COPD exacerbations incur high health care utilization and costs. Medication costs account for the majority of the costs associated with exacerbations.