While laboratory and clinical benefits of hydroxyurea for patients with sickle cell disease (SCD) are well-established, few data describe the extent and implications of non-adherence. We sought to assess adherence to hydroxyurea among patients with SCD and investigate associations between adherence and clinical and economic outcomes. Insurance claims of North Carolina Medicaid enrollees (6/2000-8/2008) with SCD were analyzed. Inclusion criteria included age <65 years, continuous Medicaid enrollment ≥12 months before and following hydroxyurea initiation, and ≥2 hydroxyurea prescriptions. Three hundred twelve patients, mean age 21 (±12.2) years, met inclusion criteria and 35% were adherent, defined as a medication possession ration (MPR) ≥ 0.80; mean MPR was 0.60. In the 12 months following hydroxyurea initiation, adherence was associated with reduced risk of SCD-related hospitalization (hazard ratio [HR] = 0.65, p = .0351), all-cause and SCD-related emergency department visit (HR = 0.72, p = .0388; HR = 0.58, p =.0079, respectively), and vaso-occlusive event (HR = 0.66, p = .0130). Adherence was associated with reductions in health care costs such as all-cause and SCD-related inpatient (−$5,286, p < .0001; −$4,403, p < .0001, respectively), ancillary care (−$1,336, p < .0001; −$836, p < .0001, respectively), vaso-occlusive event-related (−$5,793, p < .0001), and total costs (−$6,529, p < .0001; −$5,329, p <.0001, respectively). Adherence to hydroxyurea among SCD patients appears suboptimal and better adherence is associated with improved clinical and economic outcomes. Am. J. Hematol. 2011.