OBJECTIVES: The main objective of this research is to determine the dispensing cost in community pharmacy and to evaluate the factors that affect the costs. METHODS: This was a cross sectional study on the community pharmacist in Penang Island. Convenient sampling was used whereby 10 community pharmacies in Penang area were selected. A 17 items self administered questionnaire was developed consisting of question on the type of pharmacy license, pharmacist salary, non pharmacist salary, pharmacy’s area size, dispensing’s area size, overhead and capital resources in each pharmacy. Cost for dispensing prescription were calculated and  Kruskal  Wallis  test was used to compare the dispensing cost with the type of pharmacy license, postcode, weekly trading hour and availability of pharmacist personal office. RESULTS: The study found that dispensing cost in a community pharmacy is MYR 0.39 (SD = 0.08) per minute. A standard prescription with less than 5 medicines usually takes 10 minutes of dispensing time and this would cost about MYR 3.91 (SD = 0.80). The pharmacist’s salary contributes the highest percentage for the pharmacy dispensing cost which was 38.06% followed by rental (24.92%) and non-pharmacist staffs’ salary (23.25%). CONCLUSIONS: This study has estimated that the dispensing cost in a community pharmacy for a standard prescription to cost about MYR 3.91 (US$1.18). The major cost drivers in the pharmacy dispensing cost are pharmacist salary, and rent. This study would provide empirical basis for a proper reimbursement structure for pharmacy dispensing service in Malaysia.