OBJECTIVES: To estimate the direct medical costs attributable to tobacco smoking in the Latin-American healthcare systems. METHODS: A microsimulation model was used to quantify the economic impact of cardiovascular and cerebrovascular disease, COPD, pneumonia, lung cancer and other nine types of cancers. A systematic search for epidemiologic and event-cost data was carried out. The model was calibrated and validated for Argentina, Bolivia, Brazil, Chile, Colombia, Mexico and Peru. These countries accounted for 78% of the Latin-American population; then results were extrapolated to a regional level. RESULTS: Every year tobacco smoking accounts for 33,576 million dollars in direct costs for the healthcare system. This represents 0.7% of the region’s gross domestic product (GDP) and 8.3% of the healthcare budget. Cardiovascular disease, COPD and cancer accounted for 30.3%, 26.9% y 23.7% of this cost, respectively. The cost attributed to tobacco smoking ranged from 0.4% (Mexico and Peru) to 0.9% (Chile) of the GDP and 5.2% (Brazil) to 12.7% (Bolivia) of the healthcare costs. In the region, tax collection from cigarettes sales covers barely 35% of the healthcare costs attributed to tobacco smoking (8.1% in Bolivia; 63.4% in Chile). CONCLUSIONS: Tobacco smoking accounts for a significant proportion of healthcare costs in Latin America, and tax collection from cigarette sales is far from covering them. Deepening measures, such as increasing tobacco taxes should seriously be considered by the countries in the region.