PURPOSE: We compared the perioperative costs of laparoscopic radical prostatectomy (LRP) and open radical retropubic prostatectomy (RRP) at a metropolitan hospital by developing a detailed computer model. MATERIALS AND METHODS: Our predictive model incorporates institutional cost centers for operative time, operating room consumables, professional fees, hospital room and board, oral analgesics, autologous blood banking, blood transfusion and cystography. Versions with and without pelvic lymphadenectomy (PLND) were evaluated using 1 and 2-way sensitivity analyses. Operative times, lengths of stay and transfusion rates were derived from published series. We also reviewed individual hospital charges for 172 consecutive prostatectomy cases for comparison and validation of model predictions. RESULTS: The model predicted cost premiums for LRP of 14.4% (without PLND) and 17.5% (with PLND). The actual hospital charge premium for LRP and PLND was 18.4%, which differed from the predicted cost premium by less than 1%. The most significant cost centers in order of importance were operative time, length of stay and consumables. To achieve cost equivalence with RRP, operative times would need to average 159 minutes (LRP and PLND) and 174 minutes (LRP alone) holding other factors constant. Cost equivalence could not be achieved by shortening hospital stay alone unless LRP were performed as an outpatient procedure. CONCLUSIONS: Our model predicts the perioperative costs of LRP to be greater than RRP by a factor of less than 1.2x. If disposable instruments and trocars are eliminated, and patients undergoing LRP and PLND are discharged on postoperative day 2, cost equivalence with RRP and PLND can be achieved with operative times of 3.4 hours.