BACKGROUND: Of all cancer types, healthcare for lung cancer is the third most costly in Australia, but there is little detailed information about these costs. Our aim was to provide detailed population-based estimates of health system costs for lung cancer care, as a benchmark prior to wider availability of targeted therapies/immunotherapy and to inform cost-effectiveness analyses of lung cancer screening and other interventions in Australia. METHODS: Health system costs were estimated for incident lung cancers in the Australian 45 and Up Study cohort, diagnosed between recruitment (2006-2009) and 2013. Costs to June 2016 included services reimbursed via the Medicare Benefits Schedule, medicines reimbursed via the Pharmaceutical Benefits Scheme, inpatient hospitalisations, and emergency department presentations. Costs for cases and matched, cancer-free controls were compared to derive excess costs of care. Costs were disaggregated by patient and tumour characteristics. Data for more recent cases identified in hospital records provided preliminary information on targeted therapy/immunotherapy. RESULTS: 994 eligible cases were diagnosed with lung cancer 2006-2013; 51% and 74% died within one and three years respectively. Excess costs from one-year pre-diagnosis to three years post-diagnosis averaged ~$51,900 per case. Observed costs were higher for cases diagnosed at age 45-59 ($67,700) or 60-69 ($63,500), and lower for cases aged ≥80 ($29,500) and those with unspecified histology ($31,700) or unknown stage ($36,500). Factors associated with lower costs generally related to shorter survival: older age (p<0.0001), smoking (p<0.0001) and unknown stage (p = 0.002). There was no evidence of differences by year of diagnosis or sex (both p>0.50). For 465 cases diagnosed 2014-2015, 29% had subsidised molecular testing for targeted therapy/immunotherapy and 4% had subsidised targeted therapies. CONCLUSIONS: Lung cancer healthcare costs are strongly associated with survival-related factors. Costs appeared stable over the period 2006-2013. This study provides a framework for evaluating the health/economic impact of introducing lung cancer screening and other interventions in Australia.