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Health care costs for HIV infection are often reported from the economic perspective of third party payors and little data exist to show how total costs are distributed across specific health service categories. We used a retrospective cohort design to measure total medical costs for 1 year in a randomly selected sample of 280 patients treated for HIV infection at an urban health care facility. Inpatient and outpatient costs were measured from the economic perspective of the health care provider. Hospital costs included ward, ancillary, and procedure costs. Ambulatory included medications, primary and specialty care, case management, ancillary, and behavioral comorbidity treatment costs. The mean total was $20,114 per patient, of which $6,322 was for inpatient and $13,842 was for ambulatory services. Specific ambulatory costs were: medications, $9,257; primary, specialty and ancillary services, $3,470; and behavioral comorbidity treatment, $1,111. The mean annual outpatient ancillary cost was $841. Over 30% of the total service cost was for building and administrative overhead and approximately 25% of both hospital and clinic costs were for ancillary services. Independent predictors of high cost were CD4 counts, Medicaid eligibility, and behavorial comorbidities. Our outpatient costs were higher, with less variation than previously reported. Increasingly, there has been a shift of HIV care from hospital to ambulatory settings. We postulate that reimbursement rates have not captured the recent flourishing of ambulatory care. If reimbursement is not commensurate with outpatient advances, providers may be paradoxically underreimbursed for improving care.