Previous studies have documented greater use of health services by depressed persons and have postulated that health care costs could be reduced overall through better recognition and treatment of depression. To determine whether a greater burden of medical illness contributes to excess charges for diagnostic tests among older adults with symptoms of depression. Prospective cohort study. A primary care group practice at an academic institution. 3767 patients 60 years of age and older who completed testing on the Centers for Epidemiologic Studies Depression Scale (CES-D) during routine office visits. Charges for all inpatient and ambulatory diagnostic testing for 2 years, including clinical pathology, diagnostic imaging, and special procedures; number of visits to the ambulatory care center or emergency department; and number of hospitalizations. The Ambulatory Care Group case-mix approach, which is based on ambulatory diagnoses, was used as a measure of health status and expected resource consumption. Patients with symptoms of depression (CES-D scores > or = 16) were significantly younger (66.6 compared with 68.1 years; P < 0.001), more likely to be white (50.5% compared with 33.9%; P = 0.001), and more likely to be female (75.8% compared with 67.6%; P = 0.001) than were those without these symptoms (CES-D scores < 16). They also had more nonpsychiatric comorbid conditions, had more visits to the ambulatory care center (9.2 compared with 7.8; P < 0.001), were more likely to use the emergency department (52.3% compared with 40%; P = 0.001), were more likely to be hospitalized (22.4% compared with 17%; P = 0.002), and had greater median total diagnostic test charges for a period of 1 year ($583 compared with $387; P < 0.001). The difference in charges, most of which were clinical pathology charges (54.2%), persisted into the second year. Ambulatory Care Group assignment was independently associated with diagnostic test charges. The CES-D summary score was not independently associated with diagnostic test charges when controlling for Ambulatory Care Group assignment. Patients with symptoms of depression accrue greater average diagnostic test charges. However, these data suggest that such patients also have a greater burden of comorbid nonpsychiatric illness. Efforts to improve outcome and decrease cost for patients who have late-life depression must target interventions to improve the care of psychiatric and medical illness concurrently.