The severity, morbidity and financial costs of atopic eczema (AE) were assessed during a 1-year prospective study of a cohort of 85 people aged 14-63 years (mean 36 years) with the disease. A dermatologist examined each participant using the Six Area Six Sign Atopic Dermatitis severity scoring system to classify severity. Participants completed a Dermatology Life Quality Index (DLQI), a Nottingham Eczema Severity Score (NESS) and an ongoing diary of health-care consultations and treatment costs. Follow up by mail to each participant was conducted every 2 months and participants completed a NESS, a DLQI and a diary of costs incurred. The DLQI data revealed that 36% spent over 10 min per day applying treatments, 28% indicated that AE influenced the clothes they wore, 21% felt embarrassed by their skin and 15% reported problems with treatments. There appeared to be a relationship between increased morbidity and increased severity. The average annual out-of-pocket cost for products used for treatment was A$425, ranging from A$13.50 to over A$2000 per individual. The average out-of-pocket cost for medical consultations was A$120, ranging from zero to over A$800 per individual. Although there were concerns about the reproducibility of the severity and morbidity measures, the data showed that AE can have substantial effects both financially and from a personal perspective for those affected.