Differentiation therapy with all-trans retinoic acid (RA) induces more than 80% complete remission with the least complications in patients with acute promyelocytic leukemia (APL). The authors studied the cost-benefit of this new treatment modality compared with conventional chemotherapy in newly diagnosed patients with APL. Costs were calculated retrospectively through the monthly bills of each patient to national health insurance and were compared between 36 patients treated with conventional chemotherapy in the AML-87 or AML-89 studies and 40 patients treated with all-trans RA alone or with all-trans RA plus low dose chemotherapy in the AML-92 study of the Japan Adult Leukemia Study Group who were treated at 22 university and cancer hospitals in Japan. Average medical costs except for antileukemic drugs during 2 months after admission were 4,164,026 yen (approximately US$46,300) in the chemotherapy group and 2,906,825 yen (approximately US$32,300) in the all-trans RA group (P < 0.0001). The difference resulted mainly from the costs of antibiotics and of platelet and erythrocyte transfusions. Average costs of antibiotics were 650,494 yen (approximately US$7,200) and 349,138 yen (approximately US$3,900), respectively (P < 0.0002), and those of platelet and erythrocyte transfusions were 1,016,190 yen (approximately US$11,300) and 633,444 yen (approximately US$7,000), respectively (P < 0.0020). During the remission induction therapy of newly diagnosed APL, all-trans RA significantly reduced medical costs. all-trans RA should be incorporated into the front-line therapy of patients with APL for medical and economic reasons.