BACKGROUND. Data regarding costs of prostate cancer treatment are scarce. This study investigates how initial treatment choice affects short-term and long-term costs. METHODS. This retrospective, longitudinal cohort study followed prostate-cancer cases diagnosed in 2000 for 5 years using the Surveillance, Epidemiology, and End Results (SEER)-Medicare database. Men age !66 years, in Medicare fee for service, diagnosed with clinically localized prostate cancer in 2000 while residing in a SEER region, were matched to noncancer controls using age, sex, race, region, comorbidity, and survival. On the basis of treatment received during the first 9 months postdiagnosis, patients were assigned to watchful waiting, radiation, hormonal therapy, hormonal þ radiation, and surgery (may have received other treatments). Incremental costs for prostate cancer were the difference in costs for prostate cancer cases versus matched controls. Costs were divided into initial treatment (months À1 to 12), long-term (each 12 months thereafter), and total (months À1 to 60). Sensitivity analyses excluded the last 12 months of life. RESULTS. A total of 13,769 prostate-cancer cases were matched to 13,769 noncancer controls. Watchful waiting had the lowest initial treatment ($4270) and 5-year total costs ($9130). Initial treatment costs were highest for hormonal þ radiation ($17,474) and surgery ($15,197). At $26,896, 5-year total costs were highest for hormonal therapy only followed by hormonal þ radiation ($25,097) and surgery ($19,214). After excluding the last 12 months of life, total costs were highest for hormonal þ radiation ($23,488) and hormonal therapy ($23,199). CONCLUSIONS. Patterns of costs vary widely based on initial treatment. These data can inform patients and clinicians considering treatment options and policy makers interested in patterns of costs. Cancer 2010;116:5391-9.