OBJECTIVES: The economic burden of affective disorders (mood disorders) has become an important issue both for healthcare providers as well as society as a whole. This study aims at developing a model to estimating the cost of affective disorders to the European society. METHODS: A model was developed, based on the prevalence of the most prevalent affective disorders (depression and bipolar disorders) and the cost per patient for these disorders. The model served the following purposes: (1) transform and convert available economic data to a defined time period as well as currency (€2004) (2) adjust country specific economic data for purchasing power and relative size of economy (3) impute data for countries where no data were available (4) combine epidemiology and economic data to estimate the total cost of affective disorders. The model was based on published economic evidence in affective disorders in Europe, as well on epidemiologic evidence from literature and databases. National and international statistics for the model were retrieved from the Eurostat 2004 and OECD Health 2004 databases. The estimates were presented in Euro for 2004. RESULTS: The total number of adult people afflicted with affective disorders amounted to 20.9 million in Europe. The cost of affective disorders in Europe was estimated at €108.6 billion in 2004 prices. The cost of depression only amounted to €91 billion, and bipolar disorders to €31.6 billion. Indirect costs constituted 71% of the total cost of affective disorders. Drug costs made up €7.2 billion or 7% of the total cost. CONCLUSIONS: The cost of affective disorders poses a significant economic burden to European society. The cost estimation model gives a reliable estimate of the cost of illness in Europe based on the data and model algorithm used. The study was supported by the European Brain Council.