Objective To calculate the costs of influenza hospitalization at a tertiary care children's hospital as the basis of a cost-benefit analysis of the new influenza vaccine recommendation for children age 6 to 23 months. Study design We reviewed the medical records of all patients admitted to Children's Memorial Hospital (CMH) in 2002 diagnosed with influenza. Total hospital costs were obtained from the Business Development Office. Results Thirty-five charts were analyzed. Both of the 2 patients requiring mechanical ventilation and 4 of 6 patients admitted to the intensive care unit had high-risk underlying medical conditions. Nine children were age 6 to 23 months; 4 of these 9 had no preexisting medical conditions. Had all 18 high-risk children over age 6 months been protected from influenza, approximately $350,000 in hospital charges could have been saved. Conclusions Preventing the additional 4 hospitalizations in the otherwise low-risk children age 6 to 23 months for whom vaccine is currently recommended would have cost approximately $281,000 ($46/child) more than the hospital charges saved. When all children age 6 to 23 months are considered, influenza vaccination is less costly than other prophylactic measures. Addition of indirect costs, deaths, outpatient costs, and the cost of secondary cases would favor the cost:benefit ratio for influenza vaccination of all children age 6 to 23 months.