In a recently published randomised trial of chemotherapy versus palliative care in advanced non-small cell lung cancer (the MIC2 trial), chemotherapy was shown to prolong survival without compromising quality of life. The study presented here examines patterns of care and their associated costs within a representative subgroup of patients from the MIC2 trial. The study consisted of 116 patients from the South Birmingham Health Authority area. The total health service cost for each patient from entry to trial to death or last follow-up was calculated by combining the resources used with their associated unit costs. The mean cost for patients with complete data on the chemotherapy arm was 6999 pounds sterling (standard deviation (S.D.) 4194 pounds sterling) compared to 4076 pounds sterling (S.D. 3078 pounds sterling) for those with complete data on the palliative care arm. Non-parametric bootstrapping gave a difference between treatment arms in mean cost of 2924 pounds sterling(95% CI 1234 pounds sterling - 4323 pounds sterling). With a difference in mean survival of 2.4 months, this translates to an incremental cost-effectiveness ratio of 14,620 pounds sterling per life year gained. Chemotherapy was found to be more costly than standard palliative care, mainly due to the increased number of hospital in-patient days.