BACKGROUND: Malaria epidemics cause substantial morbidity and mortality in highland areas of Africa. The costs of detecting and controlling these epidemics have not been explored adequately in the past. This study presents the costs of establishing and running an early detection system (EDS) for epidemic malaria in four districts in the highlands of Kenya and Uganda. METHODS: An economic costing was carried out from the health service provider's perspective in both countries. Staff time for data entry and processing, as well as supervising and coordinating EDS activities at district and national levels was recorded and associated opportunity costs estimated. A threshold analysis was carried out to determine the number of DALYs or deaths that would need to be averted in order for the EDS to be considered cost-effective. RESULTS: The total costs of the EDS per district per year ranged between US$ 14,439 and 15,512. Salaries were identified as major cost-drivers, although their relative contribution to overall costs varied by country. Costs of relaying surveillance data between facilities and district offices (typically by hand) were also substantial. Data from Uganda indicated that 4% or more of overall costs could potentially be saved by switching to data transfer via mobile phones. Based on commonly used thresholds, 96 DALYs in Uganda and 103 DALYs in Kenya would need to be averted annually in each district for the EDS to be considered cost-effective. CONCLUSION: Results from this analysis suggest that EDS are likely to be cost-effective. Further studies that include the costs and effects of the health systems' reaction prompted by EDS will need to be undertaken in order to obtain comprehensive cost-effectiveness estimates.