A common acute condition seen by providers in retails clinics is the evaluation and treatment of acute otitis media (AOM) in children younger than age 20. Annual direct treatment costs for AOM were US $5.3 billion in 1998 dollars. Based on the experience of a large retail pharmacy employer, the authors compared AOM episodes in covered dependents younger than age 20 in retail clinic states to those in states without retail clinic access. Relative costs as well as frequency of visits and antibiotic prescriptions were analyzed for both retail clinic-based, and non-retail clinic-based episodes. Rates of AOM episodes were lower in retail clinic than in non-retail clinic states (62.5 vs. 76.9 per 1000 members per year; P < .0001). The average number of visits per episode was similar between retail clinic and non-retail clinic states (1.417 vs. 1.430, respectively; P = 0.657), suggesting that retail clinics do not result in an increase in overall utilization. On a risk-adjusted basis, retail clinic episodes cost approximately $30-$130 less than community episodes, depending on year. In retail clinic states, the antibiotic prescription fill rate was 95.4% for retail clinic episodes and 82.8% for community episodes, consistent with rates in the literature. This study confirms results of earlier studies that retail clinics are a less costly setting than the community for the treatment of episodes of otitis media There also is little evidence that retail clinics lead to duplication of services (patients receiving follow-up care in other settings).