New surgical methods and safe effective drugs for treating benign prostatic hyperplasia (BPH) have been introduced in recent years. The long-term effects of these measures and the patient categories for which each is best suited are not as yet known. Amid rapid changes in treatment policy, our study aims to establish a frame of reference in Sweden for the costs of treating BPH. In 1988 most treatment of BPH was surgical, with "watchful waiting" or indwelling urethral catheter as alternatives. Transurethral resection was the main surgical method. The costs of treating BPH in 1988 were calculated with a "prevalence" and an "incidence" approach. Direct costs accounted for 80-85% of the total were mainly hospital costs. The total economic burden of BPH treatment in Sweden was estimated as 305-390 million SEK, equivalent to 49-62 million US$ in 1988 prices. Because of the impending changes in management of BPH, follow-up of the financial consequences of these changes is important in order to secure effective use of health care resources.