BACKGROUND: Previous estimates of the cost of allergic rhinitis predate the substantial increase in the use of second-generation antihistamines and intranasal corticosteroids. OBJECTIVE: We sought to update estimates of the direct costs of allergic rhinitis in the United States and to estimate prescription medication expenditures by type of insurance coverage. METHODS: Data from the 1996 Medical Expenditure Panel Survey were used in a cross-sectional analysis of resource use and costs. RESULTS: Approximately 7.7% of the population are estimated to have had allergic rhinitis in 1996. The total direct medical cost of allergic rhinitis was estimated at $3.4 billion, with the majority attributable to prescription medications (46.6%) and outpatient visits (51.9%). Fifty-one percent of the prescription medication expenditures were for second-generation antihistamines, 25% for intranasal corticosteroids, and 5% for first-generation antihistamines. Fifty-eight percent of patients with allergic rhinitis received 1 or more prescription drugs for its treatment during the study year. Among these patients, mean prescription expenditures were $131 (95% CI, $119-$143), of which $50 (95% CI, $43-$56) were paid out of pocket. The mean prescription medication expenditure was $103 (95% CI, $70-$136) for persons with Medicaid, $155 (95% CI, $140-$169) for private insurance, $213 (95% CI, $0-$521) for other insurance, and $69 (95% CI, $57-$80) for no prescription drug insurance. CONCLUSION: The direct costs of allergic rhinitis have increased substantially since the introduction of second-generation antihistamines and intranasal corticosteroids, especially costs attributable to prescription medications. Individuals with no insurance coverage have higher total out-of-pocket prescription expenditures than those with coverage.