Background The COVID-19 pandemic impacted healthcare systems in many aspects, with the most immediate need being the increased healthcare burden and healthcare costs. This study aimed to determine the distribution of the disease and its costs of COVID-19 management in Malaysia.Methods Data on hospital admissions related to COVID-19 were coded with ICD-10 and ICD9-CM, and the combination generated DRG codes, which were A-4-13-I, A-4-13-II and A-4-13-III for mild, moderate and severe classification of COVID-19 respectively. Simultaneously, healthcare resource utilisation and costs were estimated for the codes through clinical pathways. The distribution of COVID-19 patients based on DRG was presented as frequencies and percentages while cost data were reported in US$ with the price year 2021.Results A total of 4889 patients with COVID-19 diagnosis were admitted to the hospital. Of that, 4813/4889(98%) had a primary diagnosis of COVID-19 while the remaining patients were admitted for other medical reasons, however, were found to be positive during the admission. 3909(81%) were admitted with mild COVID-19 (A-4-13-I), 630(13%) had moderate COVID-19 (A-4-13-II) and 274(6%) were admitted for severe COVID-19 (A-4-13-III). The cumulative hospital costs for mild COVID-19 (A-4-13-I) were estimated to be USD 1,543. While the cumulative hospital costs for both moderate COVID-19 (A-4-13-II) and severe COVID-19 (A-4-13-III) were estimated at USD 23,527 and USD 26,731 respectively.Conclusions The total costs incurred by the hospital for COVID-19 were estimated to be USD 19,259,153. COVID-19 resulted in significant economic implications for the healthcare system. This study provides local data and an assessment of the economic burden of Covid-19 infection in Malaysia.