One consequence of an aging population worldwide is an extensive increase of people suffering from dementia. Dementia disorders are also important cost drivers in the health and social care systems in advanced economies as well as in developing countries. To estimate the worldwide direct costs and costs of informal care of dementia. In a previously published paper, we have estimated the worldwide direct costs of dementia in 2003 to 156 billion US$ (Wimo A, Jonsson L, Winblad B. An estimate of the worldwide prevalence and direct costs of dementia in 1993. Dement Geriatr Cogn Disord 2006;21:175–181), based on a prevalence of 27.7 million demented worldwide. We have now expanded the cost model to also include costs of informal care. The cost model for informal care is based on a) published papers of the amount of informal care in terms of personal (basic) ADL and b) average wage levels in different countries. In the base–case scenario, the worldwide cost of informal care is estimated at 92 billion US$, which together with the estimate of direct cost results in a total worldwide cost of dementia of 248 billion US$. 62% of the demented live in the developing countries which account for 16% of the total costs. In a sensitivity analysis several alternative estimates are presented. All assumptions include both uncertainties and variability. However, this study demonstrates that the worldwide costs of dementia are substantial. Particularly the future increase of people with dementia in the developing countries presents is a great challenge.