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Inpatient quality deficits have important implications for the health and well-being of patients. They also have important financial implications for payers and hospitals by leading to longer lengths of stay and higher intensity of treatment. Many of these costly quality deficits are particularly sensitive to nursing care.To assess the effect of nurse staffing on quality of care and inpatient care costs.Longitudinal analysis using hospital nurse staffing data and the Healthcare Cost and Utilization Project State Inpatient Databases from 2008 through 2011.Hospital discharges from California, Nevada, and Maryland (n=18,474,860).A longitudinal, hospital-fixed effect model was estimated to assess the effect of nurse staffing levels and skill mix on patient care costs, length of stay, and adverse events, adjusting for patient clinical and demographic characteristics.Increases in nurse staffing levels were associated with reductions in nursing-sensitive adverse events and length of stay, but did not lead to increases in patient care costs. Changing skill mix by increasing the number of registered nurses, as a proportion of licensed nursing staff, led to reductions in costs.The study findings provide support for the value of inpatient nurse staffing as it contributes to improvements in inpatient care; increases in staff number and skill mix can lead to improved quality and reduced length of stay at no additional cost.