Senile dementia is a progressive and irreversible decline of mental functions. The symptoms are mental confusion, memory loss, disorientation, cognitive decline, and inappropriate social behavior. It is one of the most common, costly, and distressful diseases among the elderly in the United States. Information on the economic costs of senile dementia is essential for determining research priorities and the allocation of resources to support aging and medical research. Economic consequences, such as direct medical and nonmedical expenditures by patients' families and the amount of time by third parties in caring for patients with senile dementia, are substantial. However, little systematic accounting to estimate these consequences has been undertaken. This paper attempts to estimate various costs associated with the care of senile dementia, based on available secondary data. We have used the direct cost and indirect cost approach and avoided double counting to identify the additional economic costs due to senile dementia. The total, direct national cost of senile dementia is $13.26 billion, which includes $6.36 billion of medical care costs, $2.56 billion of nursing home care costs, and $4.34 billion of social agency service costs. The indirect cost for community home care alone is $31.46 billion, more than twice the total direct costs. The costs of premature death and loss of productivity due to senile dementia are about $43.17 billion. Although most of the indirect costs were imputed from the value of housekeeping or productivity loss, the magnitude of indirect costs reflects the serious consequences and burden on society's resources of this disease.