Objectives: Cancer of the oral cavity is the leading malignancy amongst males in Sri Lanka, and eighth amongst women. Almost all malignancies are developed from a clinically visible precursor stage called an oral potentially malignant disorder (OPMD). The objective of this study was to estimate costs of managing patients with OPMD in Sri Lanka for a 12-month period from diagnosis. Methods: A hospital-based costing study was conducted in Sri Lanka in the years 2016-2017. Three selected treatment centres participated. For societal perspectives, healthcare, household and indirect costs were used. Costs to the healthcare system included clinic visits, diagnostic biopsy, consumables and drug costs. Capital costs included apportioned value of land, buildings, equipment and furniture. Household costs consisted of out-of-pocket expenditure and indirect costs of lost income. Results: Sixty-two patients were recruited (39 male and 23 female). The majority had awareness of oral potentially malignant disorders (OPMDs). Total average cost of managing a single patient with an OPMD for 1 year was SLR 19 547 (US$ 140) which includes a health system cost of SLR 7320 (US$ 52) and household cost of SLR 12 227 (US$ 87). Travel loss and income loss were a substantial burden to patients and their families. Conclusions: Managing patients with an OPMD, even with annual monitoring, is less costly than managing patients with oral cancer. Out-of-pocket costs are very high, and these could be reduced by revising the National Management Guidelines to allow care closer to home.