Data on the burden of disease, costs of illness, and cost-effectiveness of vaccines are needed to facilitate the use of available anti-typhoid vaccines in developing countries. This one-year prospective surveillance was carried out in an urban slum community in Delhi, India, to estimate the costs of illness for cases of typhoid fever. Ninety-eight culture-positive typhoid, 31 culture-positive paratyphoid, and 94 culture-negative cases with clinical typhoid syndrome were identified during the surveillance. Estimates of costs of illness were based on data collected through weekly interviews conducted at home for three months following diagnosis. Private costs included the sum of direct medical, direct non-medical, and indirect costs. Non-patient (public) costs included costs of outpatient visits, hospitalizations, laboratory tests, and medicines provided free of charge to the families. The mean cost per episode of blood culture-confirmed typhoid fever was 3,597 Indian Rupees (US$ 1 = INR 35.5) (SD 5,833); hospitalization increased the costs by several folds (INR 18,13 1, SD 11,218, p < 0.0001). The private and non-patient costs of illness were similar (INR 1,732, SD 1,589, and INR 1,865, SD 5,154 respectively, p = 0.8095). The total private and non-patient ex-ante costs, i.e. expected annual losses for each individual, were higher for children aged 2-5 years (INR 154) than for those aged 5-19 years (INR 32), 0-2 year(s) (INR 25), and 19-40 years (INR 2). The study highlights the need for affordable typhoid vaccines efficacious at 2-5 years of age. Currently-available Vi vaccine is affordable but is unlikely to be efficacious in the first two years of life. Ways must be found to make Vi-conjugate vaccine, which is efficacious at this age, available to children of developing-countries.