A randomized controlled trial was performed to examine the cost-effectiveness of external hip protectors in the prevention of hip fractures. Since the hip protectors were not effective in preventing hip fractures in our study, the main objective became to examine whether the use of hip protectors results in lower average costs per participant in the hip protector group as compared with the control group. In addition, the average costs of a hip fracture and subsequent rehabilitation in frail, institutionalized elderly were calculated. Residents from apartment houses for the elderly, homes for the elderly and nursing homes with a high risk for hip fractures were randomized to the hip protector group (n = 276) or control group (n = 285). Costs were calculated for the hip fracture and subsequent rehabilitation until 1 year after the fracture. Six months after each hip fracture, a nurse was interviewed and after 12 months, a questionnaire was sent to the general practitioner or nursing home physician to determine the utilization of health care resources. Differences in costs between the groups were analyzed using non-parametric bootstrapping. Eighteen hip fractures occurred in the intervention group and 20 hip fractures (in 19 persons) in the control group (log rank P-value = 0.86). The average costs per participant, including the costs of the intervention, were €913 in the intervention group and 502 in the control group (cost difference of €-411; 95% confidence interval: -723; 57). The average costs of a hip fracture and subsequent rehabilitation were €8100 (95% CI: 6716-10,010). The use of hip protectors was not associated with lower costs. In addition, the average costs of a hip fracture and subsequent rehabilitation in the first year after the fracture were estimated at €8100 in institutionalized elderly. © International Osteoporosis Foundation and National Osteoporosis Foundation 2004.