Chronic obstructive pulmonary disease (COPD) poses a significant economic burden on society, and a substantial portion is related to exacerbations of COPD. A literature review of the direct and indirect costs of COPD exacerbations was performed. A systematic search of the MEDLINE database from 1998-2008 was conducted and supplemented with searches of conference abstracts and article bibliographies. Articles that contained cost data related to COPD exacerbations were selected for in-depth review. Eleven studies examining healthcare costs associated with COPD exacerbations were identified. The estimated costs of exacerbations vary widely across studies: $88 to $7,757 per exacerbation (2007 US dollars). The largest component of the total costs of COPD exacerbations was typically hospitalization. Costs were highly correlated with exacerbation severity. Indirect costs have rarely been measured. The wide variability in the cost estimates reflected cross-study differences in geographic locations, treatment patterns, and patient populations. Important methodological differences also existed across studies. Researchers have used different definitions of exacerbation (e.g., symptom- versus event-based definitions), different tools to identify and measure exacerbations, and different classification systems to define exacerbation severity. Unreported exacerbations are common and may influence the long-term costs of exacerbations. Measurement of indirect costs will provide a more comprehensive picture of the burden of exacerbations. Evaluation of pharmacoeconomic analyses would be aided by the use of more consistent and comprehensive approaches to defining and measuring COPD exacerbations.