Although race has been associated with differences in the utilization and costs of medical services for a variety of conditions, no study has examined racial differences in the expense of caring for men with early stage prostate cancer. OBJECTIVE: To compare the cost and resource utilization in the work up, treatment and 6 month follow up of African American and white men undergoing either external beam radiation therapy (XRT) or radical prostatectomy for early stage prostate cancer. DESIGN: Retrospective analysis of cost and resource utilization data from encrypted patient-specific hospital inpatient, hospital outpatient, and physician/supplier data files. PARTICIPANTS: A random 5% national sample of Medicare beneficiaries (n=8,750) from the Health Care Financing Administration (HCFA) Public Use Files for calendar years 1993 through 1996. MAIN OUTCOME MEASURES: Inpatient, outpatient and physician/supplier Medicare costs. RESULTS: African American men undergoing radical prostatectomy for early stage prostate cancer had significantly higher costs ($21,878 vs $18,786, p<0.0001) than did white men. Most of the difference occurred in the inpatient setting. African American men undergoing external beam radiation therapy (XRT) had significantly greater costs ($18,131 vs $15,734, p<0.0001) than did white men. Most of this difference was generated by longer duration of XRT treatments. CONCLUSIONS: In early stage prostate cancer, costs of treatment with either radical prostatectomy or XRT in African American men are higher than in white men.