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Background: Drug resistant-tuberculosis is a growing burden on the South African health care budget. In response the National Department of Health implemented two important strategies in 2011; universal access to drug-sensitivity testing for rifampicin with Xpert MTB/RIF as the first-line diagnostic test for TB; and decentralization of treatment for RR/MDR-TB to improve access and reduce costs of treatment. Objective: Estimate the costs by treatment outcome of decentralized care for rifampicin and multi-drug resistant tuberculosis under routine conditions. The study was set at an outpatient drug resistant-tuberculosis treatment facility at a public academic hospital in Johannesburg, South Africa. During the study period 18–24 month long course treatment was offered for rifampicin-resistant and multi-drug-resistant tuberculosis. Methods: Data are from a prospective observational cohort study. Costs of treatment were estimated from the provider perspective using bottom-up micro-costing. Costs were estimated as patient-level resource use multiplied by the unit cost of the resource. Clinic visits, drugs, laboratory tests, and total days hospitalized were collected from patients' medical records. Staff time was estimated through a time and motion study. A successful treatment outcome was defined as cure or completion of the regimen. Results: We enrolled 124 patients with 52% having a successful outcome. The average total cost/patient for all patients was $3,430 and $4,530 for successfully treated patients. The largest contributors to total cost across all outcomes were drugs (43%) and staff (28%). The average cost to achieve a successful outcome including all patients who started treatment ("production cost") in the cohort is $6,684. Conclusions: Decentralized, outpatient RR/MDR-TB care under South Africa's 2011 strategy costs 74% less per patient than the previous strategy of inpatient care. The treatment cost of RR/MDR-TB is primarily driven by drug and staff costs, which are in turn dependant on treatment length. [ABSTRACT FROM AUTHOR]