ObjectiveTo estimate direct and indirect costs associated with neuropsychiatric (NP) events in the Systemic Lupus International Collaborating Clinics inception cohort.MethodsNP events were documented annually using American College of Rheumatology definitions for NP events and attributed to systemic lupus erythematosus (SLE) or non‐SLE causes. Patients were stratified into 1 of 3 NP states (no, resolved, or new/ongoing NP event). Change in NP status was characterized by interstate transition rates using multistate modeling. Annual direct costs and indirect costs were based on health care use and impaired productivity over the preceding year. Annual costs associated with NP states and NP events were calculated by averaging all observations in each state and adjusted through random‐effects regressions. Five‐ and 10‐year costs for NP states were predicted by multiplying adjusted annual costs per state by expected state duration, forecasted using multistate modeling.ResultsA total of 1,697 patients (49% White race/ethnicity) were followed for a mean of 9.6 years. NP events (n = 1,971) occurred in 956 patients, 32% attributed to SLE. For SLE and non‐SLE NP events, predicted annual, 5‐, and 10‐year direct costs and indirect costs were higher in new/ongoing versus no events. Direct costs were 1.5‐fold higher and indirect costs 1.3‐fold higher in new/ongoing versus no events. Indirect costs exceeded direct costs 3.0 to 5.2 fold. Among frequent SLE NP events, new/ongoing seizure disorder and cerebrovascular disease accounted for the largest increases in annual direct costs. For non‐SLE NP events, new/ongoing polyneuropathy accounted for the largest increase in annual direct costs, and new/ongoing headache and mood disorder for the largest increases in indirect costs.ConclusionPatients with new/ongoing SLE or non‐SLE NP events incurred higher direct and indirect costs.