OBJECTIVES: To investigate the suitability of data sources in Germany for methodologically sound and comprehensive cost-of-illness studies and to demonstrate this by using appropriate data sources to quantify the cost of illness imposed by osteoporosis from the societal perspective. METHODS: Secondary analysis of official and administrative statistics, of structural data and of relevant publications was used to evaluate their appropriateness to estimate direct and indirect cost incurred by osteoporosis and its sequelae. RESULTS: Suitable statistics are available in Germany relating to the corresponding positions of the International Classification of Diseases, 9th edition (ICD-9). These statistics mostly cover resource use and days off work, for example, rather than immediate costs, which can be calculated using an adequate cost factor such as cost per treatment day in hospital. In some cases, costs are given directly, as is the case with rehabilitation and long-term care statistics, for example. The total annual direct and indirect costs of osteoporosis and related fractures amounted to 4.3 billion DM in 1997. Direct costs for treatment of fractures were corrected for non-osteoporotic causes; indirect costs incurred by loss of productivity were discounted by 5% annually. The largest part of 58% was caused by treatment in acute hospitals and rehabilitation units. Further 15% of total costs were devoted to long-term nursing care and 13% to outpatient care. Indirect costs due to inability to work, early retirement and premature mortality amounted to 15% of total costs and were relatively low as compared to other chronic diseases. CONCLUSIONS: (1) About three quarter of the considerable costs imposed by osteoporosis were devoted to late complications whereas cost for prevention and rehabilitation were low. (2) Cost of illness can be estimated in Germany for most of the diseases that are classified on the 3-digit level of the ICD-9.