Background Recently, massive increases in health-care costs for the diagnosis and management of skin lesions have been observed (2000-05). The aim of this study was to describe the health system costs attributed to the diagnosis and management of suspicious skin lesions detected during a trial of a population melanoma screening programme (1998-2001). Setting Queensland, Australia. Methods Data from the trial and Medicare Australia were used to categorize and cost all suspicious skin lesions arising from the trial, which included general practitioner consultations, diagnosis/ management and pathology. Comparisons were made with other screened and unscreened populations. Results Overall, 2982 lesions were treated within the trial producing a mean cost of Aus$118 per lesion. Excisions for benign lesions contributed the greatest proportion of total costs (45%). The total cost burden was approximately 10% higher for men than women, and 63% of overall costs were for persons aged X50 years. For diagnosis and management procedures, the estimated average cost per 1000 individuals was Aus$23,560 for men aged X50 years from the skin cancer screening trial, compared with Aus$26,967 for BreastScreen Australia and Aus$3042 for the National Cervical Screening Program. Conclusions The proportion of costs for benign skin lesions and biopsies arising from the screening programme were no higher than in the two-year period outside the trial. While comparisons are difficult, it appears that diagnostic and management costs for skin cancer as a result of screening may be comparable with those for BreastScreen Australia, if screening is targeted at men aged X50 years.