Cyclosporine is associated with lower hospitalization costs for transplantation of cadaver kidneys. Whether this cost-lowering effect persists after discharge was assessed for 203 patients who received cadaver kidneys at the University of California, San Francisco, between July 1982 and June 1986. During the transplantation hospitalization period, cyclosporine was associated with significantly better graft survival (88.7% vs 71.0%) and lower (standardized) costs ($37,174 vs $52,983). Following discharge, however, there were no significant differences in graft survival, total charges ($29,716 vs $34,434), the number of readmissions, the total number of days hospitalized, or physician charges, although cyclosporine was associated with higher drug costs ($3885 vs $373). The results suggest that the initial association of cyclosporine with lower costs diminished substantially over time. For grafts that survive beyond several months, there may be little additional cost-reducing benefits of cyclosporine.