The infrequent use ABO incompatible (ABOi) kidney transplantation in the US may reflect concern about the costs of necessary preconditioning and post-transplant care. Medicare data for 26,500 live donor kidney transplant recipients (2000 to March 2011), including 271 ABOi and 62 A2-incompatilbe (A2i) recipients, were analyzed to assess pre-transplant, transplant episode, and 3 year post-transplant cost impacts. The marginal costs of ABOi and A2i vs. ABO compatible transplant (ABOc) were quantified by multivariate linear regression including adjustment for recipient, donor and transplant factors. Compared with ABOc transplantation, patient (93.2% vs 88.15, P=0.0009) and death-censored graft survival (85.4% vs 76.1%, P<0.05) at three years were lower after ABOi but not A2i. The average overall cost of the transplant episode was significantly higher for ABOi ($65,080) compared with A2i ($36,752) and ABOc ($32,039) transplantation (P<.001) excluding organ acquisition. ABOi was independently associated with incrementally higher post-transplant spending (year 1: $25,044, year 2: $10,496, year 3: $7,307; P<0.01). ABOi transplantation provides a clinically effective method to expand access to transplantation. While more expensive, the modest increases in total spending are easily justified by avoiding long term dialysis and its associated morbidity and costs.