OBJECTIVE: To estimate the economic impact of a measles outbreak and response activities that occurred in Keffa Zone, Ethiopia with 5257 reported cases during October 1, 2011-April 8, 2012, using the health sector and household perspectives. METHODS: We collected cost input data through interviews and record reviews with government and partner agency staff and through a survey of 100 measles cases-patients and their caretakers. We used cost input data to estimate the financial and opportunity costs of the following outbreak and response activities: investigation, treatment, case management, active surveillance, immunization campaigns, and immunization system strengthening. FINDINGS: The economic cost of the outbreak and response was 758,869 United States dollars (US$), including the opportunity cost of US$327,545 (US$62.31/case) and financial cost of US$431,324 (US$82.05/case). Health sector costs, including the immunization campaign (US$72.29/case), accounted for 80% of the economic cost. Household economic cost was US$29.18/case, equal to 6% of the household median annual income. 62% of economic costs were covered by partner agencies. CONCLUSION: The economic cost of the measles outbreak was substantial when compared to household income and health sector expenditures. Improvement in two-dose measles vaccination coverage above 95% would both reduce measles incidence and save considerable outbreak-associated costs to both the health sector and households.