The aims of the study were to understand the racial/ethnic differences in cost of care and mortality in Medicare elderly with advanced stage prostate cancer. This retrospective, observational study used SEER-Medicare data. Cohort consisted of 10,509 men aged 66 or older and diagnosed with advanced-stage prostate cancer between 2001and 2004. The cohort was followed retrospectively up to 2009. Racial/ethnic variation in cost was analyzed using 2 part-models and quantile regression. Step-wise GLM log-link and Cox regression was used to study the association between race/ethnicity and cost and mortality. Propensity score approach was used to minimize selection bias. Pattern of cost and mortality varies between racial/ethnic groups. Compared with other racial/ethnic groups, non-Hispanic white patients had higher unadjusted costs in treatment and follow-up phases. Quintile regression results indicated that in treatment phase, Hispanics had higher costs in the 95th quantile and non-Hispanic blacks had lower cost in the 95th quantile, compared with non-Hispanic white men. In terminal phase non-Hispanic blacks and Hispanics had higher cost. After controlling for treatment, all-cause and prostate cancer-specific mortality was not significant for non-Hispanic black men, compared with non-Hispanic white men. However, for Asians, mortality remained significantly lower compared with non-Hispanic white men. In conclusion, relationship between race/ethnicity, cost of care, and mortality is intricate. For non-Hispanic black men, disparity in mortality can be attributed to treatment differences. To reduce racial/ethnic disparities in prostate cancer care and outcomes, tailored policies to address underuse, overuse, and misuse of treatment and health services are necessary.