In Germany, accurate data on the prevalence and treatment of osteoporosis, as well as the cost of this illness, are not available. The aim of this study is to give a valid estimation of these items for the year 2003. Routine data from a German sickness fund covering 1.5 million beneficiaries and billing data for outpatient visits were used to obtain estimates of prevalence for osteoporosis. Claims data for patients with osteoporosis (M80, M81) or an osteoporosis-related fracture diagnosis (S22, S32, S42, S52, S72, S82) or treatment with anti-osteoporosis drugs were examined. Costs were calculated from the perspective of the German health insurance system and the German nursing care insurance system, respectively. Only direct costs of osteoporosis were considered. In 2003, 7.8 million Germans (6.5 million women) were affected by osteoporosis. Of them, 4.3% experienced at least one clinical fracture. Only 21.7% were treated with an anti-osteoporosis drug. The total direct costs attributable to osteoporosis amounted to euros 5.4 billion. This study confirms that osteoporosis is underdiagnosed, undertreated and imposes a considerable economic burden on the health system in Germany. Effective strategies for the prevention and management of this disease are needed.