OBJECTIVE: The objective of this study was to compare survival and costs before and after the availability of HAART as a treatment regimen for HIV-infected individuals at a Veterans Affairs Medical Center. STUDY DESIGN: This was a retrospective database study covering five US government fiscal years (1994 through 1998). During that time frame, protease inhibitors were introduced, allowing the use of potent combination drug therapy known as highly-active antiretroviral therapy (HAART). METHODS: Survival methods were used to analyze differences in total costs of care and survival between two cohorts treated when HAART was not available and when HAART was available. Survival was measured in days. Health care costs were available for hospitalizations, clinic visits, outpatient medications, and laboratory procedures. A sensitivity analysis was performed to determine the impact of estimates for the costs of clinic visits of varying lengths. RESULTS: Statistically significant improvements in survival and reductions in costs were observed for time period after HAART became available. Mean survival increased from 589 days before the availability of HAART to 702 days after HAART became available (p <0.001). Median annual costs of care decreased from $29,477 to $16, 219 (p <0.001). CONCLUSIONS: The availability of potent, yet expensive, antiretroviral medications for the treatment of HIV- infected individuals at the Denver VAMC has resulted in improved survival and lower overall medical care costs.