ABSTRACT: BACKGROUND: Little is known about the costs of HIV care in Ethiopia. OBJECTIVE: To estimate the average per person year (PPY) cost of care for HIV patients with and without anti-retroviral therapy (ART) in a district hospital. METHODS: Data on costs and utilization of HIV-related services were taken from Arba Minch Hospital (AMH) in southern Ethiopia. Mean annual outpatient and inpatient costs and corresponding 95% confidence intervals (CI) were calculated. We adopted a district hospital perspective and focused on hospital costs. FINDINGS: PPY average (95% CI) costs under ART were US$235.44 (US$218.11-252.78) and US$29.44 (US$24.30-34.58) for outpatient and inpatient care, respectively. Estimates for the non-ART condition were US$38.12 (US$34.36-41.88) and US$80.88 (US$63.66-98.11) for outpatient and inpatient care, respectively. The major cost driver under the ART scheme was cost of ART drugs, whereas it was inpatient care and treatment in the non-ART scheme. CONCLUSION: The cost profile of ART at a district hospital level may be useful in the planning and budgeting of implementing ART programs in Ethiopia. Further studies that focus on patient costs are warranted to capture all patterns of service use and relevant costs. Economic evaluations combining cost estimates with clinical outcomes would be useful for ranking of ART services.