The cost of delivering a unit of blood (whole blood or red cells) to a hospitalized patient was examined in 19 United States teaching hospitals. The average hospital acquisition cost was calculated by using the prices charged by regional blood centers for blood products. To this cost was added an estimate of costs incurred by hospitals for handling, testing, and administering blood. Across study sites, the average hospital cost per unit transfused was $155 and the average charge to the patient was $219. Acquisition cost, the price that hospitals pay for blood, was 37 percent of the total cost to the hospital; the other 63 percent of the hospital cost included costs for blood bank handling (13%), laboratory tests (43%), and blood administration (7%). Significant variations in blood transfusion cost were found within our sample. Most of the variability can be attributed to geographic location of the blood supply source, type of red cell product transfused, prices charged by blood transfusion services, and the frequency of laboratory tests. The results of this transfusion cost study may be helpful in determining the costs of health care delivery, especially when blood transfusions are indicated.