Otitis media (OM) is one of the most common diseases of childhood, and causes both direct and indirect costs to families and to society. This study calculated the costs arising from OM among 736 day care children whose infections were prospectively monitored for up to 15 mo in 10 day care centres in the city of Oulu. The children in the survey had 1.5 attacks of acute OM per person year, made 2.1 visits to a physician (cost $US55 visit(-1)) and received 1.5 courses of antimicrobials (cost $24 course(-1)). Their parents were absent from work for 1.9 d per person year (cost $85 d(-1)). Either adenoidectomy ($890 operation(-1)) or tympanostomy ($740) was performed on 6% of the children and the overall costs of surgery were $80 per person year at risk. In total, each single attack of acute OM cost $228. The average annual costs per child younger than 2 y were $1040, those for children aged 2-3 y $283 and those for children older than 3 y $141. The cumulative costs from age 6 mo to 7 y were $2549 child(-1). When the attributable risk of OM at a day care centre is taken into account, in Finland, a country with about 5 million inhabitants, OM gives rise to total annual costs of $US138 million. OM leads to considerable expenses and even expensive preventive measures would be cost-effective.