OBJECTIVES: To estimate annual direct cost due to urinary incontinence (UI) of women in Iceland in 2004 and to evaluate proportion of out-of pocket cost for different age groups and treatments. METHODS: The prevalence calculations are base on published studies and a questionnaire of 10,000 women reporting prevalence, proportion seeking care and out of pocket expenditures. The direct cost estimate included cost for diagnosis, therapy and routine care. It did not include cost due to the consequences of the disease or the monetary loss as a result of seeking treatment. Cost of active treatment and routine care came from the National Insurance, University Hospital, smaller hospitals and 7 nursing homes. All cost was from the year 2004 except the cost from the questionnaire and that was adjusted to the year 2004. Three subgroups of women with UI were identified. RESULTS: For the largest subgroup 16-64yrs. old the total annual direct cost was 4,4 million $ or 132 $ per woman, 35% was due to active treatment and 70% was out of pocket cost. For the next largest subgroup 65yrs. and older the total annual direct cost was 1,9 million $ or 284 $ per woman, 37% was due to active treatment and 46% was out of pocket cost. For the smallest subgroup 65yrs. and older in nursing homes the total annual direct cost was 8.3 million $ or 7538 $ per woman. CONCLUSION: Seventy percent of the annual total direct cost of UI is due women 65yrs. and older. This cost will increase substantially with aging population. Women with UI in nursing homes generate 55% of the total cost. If the proportion of active treatment is increased in the younger age group, health care authorities cost will increase but it could be more cost effective.