This study determined incremental direct expenditures of treating hypertension in the University Sains Malaysia (USM) located in Penang, Malaysia. We have used prevalence based cost of illness approach as sub-division of pharmacoeconomic study in order to calculate the total expenses for illness and then to estimate the direct medical cost of hypertension for 2005 and 2006 from the organizational perspective. In this study, the calculated direct medical cost was consisted of the cost of drugs and the cost of health providers in managing hypertension. It is observed that the total direct cost of hypertension management in 2005 was RM 114,654.86. Of this amount 74.65% was spent on medicines while health workers cost constituted about 25.35% of the overall amount. The total cost per patent per year was RM 235.88. The total direct cost of hypertension management in 2006 was RM 116,822.55 of this amount 80.53% was spent on medicines while health workers cost constituted about 19.47% of the overall amount. The total cost per hypertensive person per year was RM 228.61. It is found that the drugs constituted about 74.6% of total direct medical costs in 2005 and 80.5% of total direct medical costs in 2006, while the cost of health personnel constituted 25.3% of the total direct medical cost in 2005 and 19.4% of total direct medical costs in 2006. With incremental direct medical expenditures estimated at nearly RM 1168, 22.55 in 2006, hypertension expenditures represent a significant amount of health care resource use in this small population setting in Malaysia.