OBJECTIVES: In the US, over 5 million people suffer from Alzheimer’s Disease (AD). The objective of this study is to estimate direct medical costs attributable to AD for Medicare enrollees in 2008 and 2010 according to cost category. METHODS: Data were from the Centers for Medicare & Medicaid Services (CMS) chronic conditions public use files in which each record is a profile defined by all combinations of age category, gender, chronic conditions, and dual-eligibility status. For each profile, cost measures generated from claims data are provided in the form of averages by cost category. Our study population (n=23.7m) included Medicare enrollees in years 2008 and 2010 who: 1) had 12 months enrollment; 2) did not have dual eligibility; 3) were age 65 and over. We examined costs of hospital admissions, skilled nursing facility, physician and other provider visits, outpatient visits, and prescriptions medications. To determine the cost associated with AD, we estimated multivariable OLS linear regression models with cost as the dependent variable and a dichotomous AD indicator as the primary independent variable, adjusted for age, gender and other chronic conditions and weighted using frequency counts.  RESULTS: Adjusted costs associated with AD were highest for skilled nursing facility use, medications, and inpatient services, at $1680, $1280 and $1114, respectively, in 2010. Of the 11 chronic conditions examined, AD was the most costly in terms of added medication expenditures, with added annual costs $300 more than the next closest condition, chronic obstructive pulmonary disorder (COPD, Table). It was also the second most costly condition in terms of skilled nursing facility costs, surpassed only by stroke in adjusted analyses. CONCLUSIONS: Interventions, including treatment for reversible causes, lifestyle modification, and use of cost-effective treatments, may be needed to stem cost increases attributable to AD, particularly as the population ages.