Background While the costs associated with Alzheimer's disease have been shown to be significant, there are few data relating cost of care to severity of the disease. Aims We aimed to compare the costs associated with different severities of Alzheimer's disease with those incurred by control subjects over a three-month period. Method In this cross-sectional, multicentre, naturalistic analysis, non-institutionalised patients with Alzheimer's disease (128), their care-givers (128), and 56 matched controls were interviewed once to establish resource use over the previous three months. Patients were stratified into three severity groups according to their Mini Mental State Examination score. Costs were calculated from the perspective of society as a whole. Results Over the three-month period, total mean cost per control subject (pound 387) was minor compared with mean cost incurred by patients with mild (pound 6616), moderate (pound 10 250) and severe (pound 13 593) Alzheimer's disease. Indirect cost, mainly time spent by care-givers, was the main cost component in ail groups (68.6%), followed by direct medical costs (24.7%). Conclusions The cost of care for an Alzheimer's disease patient is directly related to the severity of the patient's illness. Declaration of interest Funded by Glaxo Wellcome Research & Development.