OBJECTIVE. To determine differences in healthcare costs between cases of methicillin-susceptible Staphylococcus aureus (MSSA) infection and methicillin-resistant S. aureus (MRSA) infection in adults. DESIGN. Retrospective study of all cases of S. aureus infection. SETTING. Department of Veterans Affairs hospital and associated clinics. patients. There were 390 patients with MSSA infections and 335 patients with MRSA infections. METHODS. We used medical records, accounting systems, and interviews to identify services rendered and costs for Minneapolis Veterans Affairs Medical Center patients with S. aureus infection with onset during the period from January 1, 2004, through June 30, 2006. We used regression analysis to adjust for patient characteristics. RESULTS. Median 6-month unadjusted costs for patients infected with MRSA were $34, 657, compared with $15, 923 for patients infected with MSSA. Patients with MRSA infection had more comorbidities than patients with MSSA infection (mean Charlson index 4.3 vs 3.2;P<.001). For patients with Charlson indices of 3 or less, mean adjusted 6-month costs derived from multivariate analysis were $51, 252 (95% CI, $46, 041-$56, 464) for MRSA infection and $30, 158 (95% CI, $27, 092-$33, 225) for MSSA infection. For patients with Charlson indices of 4 or more, mean adjusted costs were $84, 436 (95% CI, $79, 843-$89, 029) for MRSA infection and $59, 245 (95% CI, $56, 016- $62, 473) for MSSA infection. Patients with MRSA infection were also more likely to die than were patients with MSSA infection (23.6% vs 11.5%;P<.001). MRSA infection was more likely to involve the lungs, bloodstream, and urinary tract, while MSSA infection was more likely to involve bones or joints; eyes, ears, nose, or throat; surgical sites; and skin or soft tissue (P<.001).CONCLUSIONS. Resistance to methicillin in S. aureus was independently associated with increased costs. Effective antimicrobial stewardship and infection prevention programs are needed to prevent these costly infections.