A comprehensive understanding of the cost components of common illnesses is a necessary first step towards ensuring optimal use of scarce healthcare resources. Since breast cancer is the commonest malignancy affecting Canadian women, we estimated the direct healthcare costs associated with the lifetime management of a cohort of 17700 women diagnosed in 1995. Using a multiplicity of data sources, treatment algorithms, follow-up and disease progression patterns were determined by age (<50; >/=50 years) for all four stages of breast cancer at diagnosis, as well as for the management of local and distant recurrence. Statistics Canada's Population Health Model (POHEM) was used to integrate the data from the different sources and to estimate the lifetime costs, discounted at 0, 3 and 5% rates. The average undiscounted lifetime cost per case of treating women diagnosed with breast cancer varied by stage, from $36,340 for stage IV or metastatic disease, to $23,275 for stage I patients. The total cost of treatment for the cohort diagnosed in 1995 was estimated to be over 454 million Canadian dollars. Hospitalisation (mainly for initial treatment and terminal care) represented 63% of the lifetime costs of care delivery. Disease costing models are valuable tools for optimising the use of scare resources without compromising the health status of individual patients. The breast cancer costing model has recently been used to assess the cost impact and cost-effectiveness of providing radiotherapy to all patients undergoing breast surgery, and of performing outpatient breast surgery.