Dengue, a mosquito-borne viral infection that affects millions around the world, poses a substantial economic burden in endemic countries. We conducted a prospective costing study in hospitalized pediatric dengue patients at the Lady Ridgeway Hospital for Children (LRHC), a public pediatric hospital in Colombo district, Sri Lanka, to assess household out-of-pocket and hospitalization costs of dengue in pediatric patients during peak dengue transmission season. Between August and October 2013, we recruited 216 hospitalized patients (aged 0-3 years, 27%; 4-7 years, 29%; 8-12 years, 42%) who were clinically or laboratory diagnosed with dengue. Using 2013 US dollars, household out-of-pocket spending, on average, was US$59 (SD 49) per episode and increased with disease severity (DF, US$52; DHF/DSS, US$78). Pediatric dengue patients received free-of-charge medical care during hospitalization at LRHC, and this places a high financial burden on hospitals. The direct medical cost of hospitalization was US$68 (SD 31.4) for DF episode, and US$122.7 (SD 65.2) for DHF/DSS episode. Yet a hospitalized dengue illness episode still accounted for 20% to 35% of household monthly income due to direct and indirect costs. Additionally, a majority of caregivers (70%) sought outpatient care before hospitalization, most of whom (81%) visited private health facilities. Our findings indicate that hospitalized pediatric dengue illness poses a nontrivial cost burden to households and healthcare systems, emphasizing the importance of preventing and controlling the transmission of dengue in endemic countries.