This study was designed to compare costs of adjuvant radiation versus observation in the management of early-stage testicular seminoma after inguinal orchiectomy. A line-by-line inspection of the charges generated during a course of adjuvant pelvic and paraaortic radiotherapy and of three cycles of bleomycin, etoposide, and platinum salvage chemotherapy was performed for five patients who received irradiation and five patients who received salvage chemotherapy. The average charge for either treatment was then calculated. Only those charges directly associated with the diagnosis of seminoma were included in the analysis. Follow-up charges were also generated from the patients' billing records. The optimum follow-up regimen for either management option was derived from a synthesis of the international literature. A 5% rate of failure was assumed if adjuvant irradiation was administered, and a 15% rate of failure was assumed if observation was the option chosen. Charges were truncated at 5 years. The total charge generated over 5 years based on following a policy of observation is $27,223 per patient versus $19,557 if the option of adjuvant irradiation in chosen. Using University of Wisconsin institutional reimbursement rates, the estimated costs were $20,487 and $14,722 for the option of observation and adjuvant radiation, respectively. The cost equivalence point between the two options occurs at 2.5 years, when the initial cost of adjuvant radiotherapy is matched by the cost generated during the period of observation. The maximum cost difference is achieved by 5 years. Following a policy of observation postorchiectomy for early-stage testicular seminoma generates 39% more medical costs per patient over a 5-year follow-up period than does following the standard policy of adjuvant irradiation to the pelvic and paraaortic regions, with no reported difference in outcome.