OBJECTIVE: To prospectively assess direct medical costs incurred by primary cadaveric renal transplant patients during the initial six month post-transplant period. METHOD: A subset of patients enrolled in a phase IIIb renal transplant clinical trial comparing two formulations of cyclosporine A participated in a prospective economic evaluation that included the collection of hospital bills and monthly patient telephone surveys. Direct medical costs were determined for all hospitalizations, outpatient provider visits, and urgent care center visits. Both the UB-92 and itemized hospital bills were requested for all reported hospitalizations. For outpatient encounters, the length and reason for visit were used to assign an appropriate Current Procedural Terminology code with the corresponding reimbursement determined using the 1996 Medicare Resource Based Relative Value Scale payment system. Analyses were performed from the perspective of Medicare, the primary payer of medical care for end-stage renal disease patients in the U.S. RESULTS: 69 of the 119 patients participating in the economic evaluation had complete data and were included in the analyses. The mean cost per patient (± SD) for the transplant hospitalization was $51,997 (± $16,854). Mean per patient costs for hospitalizations that occurred during the follow-up period were $5,687 (± $12,906). Mean outpatient costs were $423 (± $445). CONCLUSION: Total direct medical costs per patient for the first six months post transplant were $58,171 (± $20,539). Limitations of this study included the inability to collect all hospital bills, the exclusion of inpatient professional fees, and reliance on patient recall. Clinical data will be used to supplement the telephone survey results and to differentiate between transplant and non-transplant related hospitalizations.