Background: Drug-related problems (DRP) are common in the elderly population, especially in people living with dementia (PwD). DRP are associated with adverse outcomes that could result in increased costs. Objective: The objective of the study was to analyze the association between DRP and healthcare costs in PwD. Methods: The analysis was based on the cross-sectional data of 424 PwD. Compliance, adverse effects, and drug administration of prescribed and over-the-counter drugs taken were assessed. DRP were identified and classified by pharmacists using an adapted German version of "PIE-Doc (R)". Healthcare utilization was assessed retrospectively used to calculated costs from a public payer perspective using standardized unit costs. The associations between DRP and healthcare costs were analyzed using multiple linear regression models. Results: 394 PwD (93%) had at least one DRP. An inappropriate drug choice was significantly associated with increased total costs (b = 2,718(sic); CI95% 1,448-3,988) due to significantly higher costs for hospitalization (b = 1,936(sic); 670-3,202) and for medications (b = 417(sic); 68-765). Problems with medication dosage and drug interactions were significantly associated with higher medication costs (b = 679(sic); 31-1,328; and b = 630(sic) ; 259-1,001, respectively). Conclusions: DRP could significantly lead to adverse outcomes for PwD and healthcare payers, reflected by a higher hospitalization and costs, respectively. Further research is needed to clarify on interventions and approaches efficiently avoiding DRP and on the effect on patient-reported and economic outcomes.