OBJECTIVES:   While many new cancer treatments are expensive, their improved side effect profile may reduce overall costs to the healthcare system compared to traditional chemotherapy.  The objective of this work was to identify a benchmark approach to the estimation of costs for chemotherapy side effects, which could then be incorporated into estimates of overall chemotherapy costs.   METHODS: A systematic review of clinical and economic literature was undertaken using multiple databases and search terms for chemotherapy, adverse events, and cost.  Eligible articles were reviewed for methods, quality and cost outcomes.  Results were combined using descriptive techniques to identify best practice methodologies for estimating resource use and costs associated with managing chemotherapy side effects.  RESULTS:   From 4985 titles, 59 eligible articles were identified.  Studies were divided into model based analysis (n=33) and empirical studies (n=26).  The perspectives, approaches, and methods for estimating quantities and value of resources consumed were highly variable. These disparate methods contributed to highly divergent estimates of cost when specific side effects were examined (eg $446 to $17,889 for neutropenia, 2009 AUD).   A clear benchmark approach to the economic analysis of chemotherapy side effects was not available.  Thus, general methodological recommendations were made to guide development of reliable, valid and transparent estimates of the costs of chemotherapy side effects, based on best practice modelling techniques. The recommendations address issues such as the use of A) the health care system perspective; B) clinical guidelines and patterns of care studies to identify resources; C) modelling and empirical methods to obtain accurate costing information; and D) appropriate modelling to allow incorporation into broader economic evaluations.  CONCLUSIONS: These recommendations provide a framework for developing cost estimates for specific adverse events.  The EMCaP Project will utilise this framework to incorporate estimates of adverse event costs into broader economic evaluations of alternative chemotherapy protocols.