Objective. To compare the hospital inpatient costs between nonobese and obese patients and estimate the economic burden of obesity in primary total knee arthroplasty (TKA). Methods. A cost identification study was conducted in a consecutive cohort of 530 patients who underwent TKA between 2006 and 2007 at a university-affiliated tertiary referral center in Melbourne, Australia. Total hospital inpatient costs incurred at the study institution associated with the index surgery and subsequent related emergency presentations and readmissions during the episode of care were captured. Predictor variables of interest were obesity and body mass index (BMI), and the outcomes of interest were total hospital inpatient costs for the index surgery and episode of care, defined as the first 12 months following TKA. Multivariate linear regression techniques were used to examine the association between the predictors of interest and hospital costs, adjusting for clinically relevant variables. Results. Economic data were analyzed in 521 patients, of which 317 (60.8%) were obese. Obesity was associated with higher inpatient index surgery costs (+$1,226.89 [95% confidence interval (95% CI) $82.25, $2,371.52]; P=0.036) and episode of care costs ($1,821.36 [95% CI $244.93, $3,397.79]; P=0.024). Each unit increase in BMI was also associated with higher inpatient index surgery costs ($128.91 [95% CI $34.53, $223.28]; P=0.008) and total episode of care costs ($158.79 [95% CI $28.54, $289.05]; P=0.017). Conclusion. The estimated significant additional annual obesity-related expenditure reported in this study establishes a rationale to trial and evaluate interventions that target weight loss in obese patients undergoing TKA from both a quality of life and economic perspective.