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Objective To determine the cost of rotavirus and all-cause diarrhoea in Vellore, India. Methods Parents of children <5 years of age accessing clinics, emergency rooms, or hospitals for acute diarrhoea completed a questionnaire detailing healthcare utilisation, medical and non-medical expenditures, and lost income. Faecal samples were screened for rotavirus and medical records were examined. Costs were estimated for inpatient and outpatient resource consumption, stratified by facility. Results Total societal costs of a hospitalised diarrhoeal episode were Rs 3278.50 (US$ 80.80) at a large referral hospital and Rs 1648.60 (US$ 40.60) at a smaller community hospital. Costs for rotavirus positive or negative gastroenteritis were similar. Median household expenditures per diarrhoeal episode at the referral and the community hospitals equalled 5.8% and 2.2% of the annual household income, respectively. Conclusions Diarrhoeal disease in children constitutes a considerable economic burden. An appropriately priced and effective rotavirus vaccine may provide significant economic savings for the Indian household and healthcare system. [ABSTRACT FROM AUTHOR]