Mycobacterium ulcerans gives rise to severe skin ulceration that can be associated with considerable illness. The cost of diagnosis, treatment, and lost income has never been assessed in Australia. A survey of 26 confirmed cases of the disease in Victoria was undertaken. Data were collected on demographic details, diagnostic tests, treatment, time off work, and travel to obtain treatment. All costs are reported in Australian dollars in 1997-98 prices. The cost varies considerably with disease severity. For mild cases, the average direct cost is 6,803 Australian dollars, and for severe cases 27,681 Australian dollars. Hospitalization accounts for 61% to 90% of costs, and indirect costs amount to 24% of the total per case. M. ulcerans can be an expensive disease to diagnose and treat. Costs can be reduced by early diagnosis and definitive treatment. Research is needed to find cost-effective therapies for this disease.