OBJECTIVE: To evaluate the impact of surgical complications on length of stay and hospital charges after liver transplantation. DESIGN: A retrospective economic evaluation of the outcomes during initial hospitalization after liver transplantation. SETTING: University hospital treating referred patients. PATIENTS: The study population was 109 patients undergoing 111 liver transplantations during fiscal year 1993. MAIN OUTCOME MEASURES: Hospital charges and length of stay during the initial hospitalization after liver transplantation. Multivariate regression methods were used to analyze the impact of surgical complications on costs. RESULTS: Of the 111 transplantations, 30 (27%) had a surgical complication that required a return to the operating room during the initial hospitalization. The effect of a surgical complication was to increase the mean hospital charges (excluding physician charges) from $150,092 to $347,728 (difference of mean, $197,636; confidence interval of difference, $114,153 to $319,326). The median length of stay was 16 days for patients without complications and 45 days for those with complications. Univariate and multivariate models suggested that surgical complications had the greatest effect on length of stay and hospital charges among the factors studied. Complications tended to occur more frequently among patients with United Network for Organ Sharing (UNOS) status 1 (42% vs 22%), but this did not reach statistical significance (P = .09). CONCLUSIONS: Surgical complications after liver transplantation have a marked impact on the cost of the procedure. The magnitude of this effect is greater than that of UNOS status, presence of rejection, or other demographic or clinical factors studied. Complications tend to occur in the most ill patients. Identifying strategies to reduce the risk of complications, particularly in patients with UNOS status 1, likely can reduce the cost of transplantation.