OBJECTIVES: The increasing prevalence of patients with end-stage renal disease in Malaysia is driving up the costs of dialysis care dramatically.  Several studies have projected significant cost savings by increasing the proportion of patients on peritoneal dialysis (PD). This study investigates the five-year healthcare budget impact of variable distribution of adult patients treated with PD and in-center hemodialysis (ICHD) on government funding in Malaysia. METHODS: An Excel^®-based budget impact model was constructed to assess dialysis-associated costs when changing dialysis modalities between PD and ICHD.  The model incorporates the current modality distribution and accounts for Malaysian government dialysis payments and EPO costs. Epidemiological data, including dialysis prevalence, incidence, mortality, and transplant rate from Malaysian renal registry reports, were used to estimate the dialysis patient population for the next five years. The baseline scenario assumed a stable distribution of PD (8%) and ICHD (92%) over five years.  Alternative scenarios included the prevalence of PD increased by 2.5%, 5.0%, and 7.5% or decreased 1% yearly over five years. All four scenarios were accompanied with commensurate changes in ICHD. RESULTS: Under the current best available cost information, an increase in the prevalent PD population from 8% in 2014 to 18%, 28%, or 38% in 2018 is predicted to result in five-year cumulative savings for the Malaysian government of RM13.9 million, RM27.9 million, and RM41.96 million, respectively. If the prevalent PD population were to decrease from 8% in 2014 to 4.0% by 2018, the total expenditure for dialysis treatments would increase by RM5.6 million over the next five years. CONCLUSIONS: Under the best available cost information associated with PD and HD paid by the Malaysian government, increasing the proportion of patients on PD could result in reduction in dialysis-associated costs in the future.