A retrospective cohort control study of three populations, 65 years of age or older, at the same institution estimated the incremental cost of Alzheimer's disease (AD). The AD population of the ambulatory Alzheimer's Disease Center (ADC) (n = 640) was matched by age, gender, ethnicity, and address to one with AD from the general internal medicine practice (AD-GM) (n = 419) and to a control group without AD (n = 5331) from the same general medicine practice. Medicare costs of all care for all diagnoses were obtained for 1998 and 1999. Mean per person annual Medicare costs were $19,418 for ADC, $18,753 for AD-GM, and $12,085 for the control group. Incremental cost for ADC population was $7,333 and $6,668 for AD-GM population compared with the control group. Incremental cost was $665 (9.1 percent) higher for ADC than AD-GM. Higher non-AD hospitalizations and length of stay (LOS) by AD populations were the main cost drivers.