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<h4>Objectives</h4>To evaluate primarily the relationship between postoperative complications and hospital costs, and secondarily the relationship between postoperative complications and mortality, following radical cystectomy.<h4>Methods</h4>Postoperative complications were retrospectively examined for 147 patients undergoing radical cystectomy at a university hospital between January 2012 and July 2021. Complications were defined and graded using the Clavien-Dindo classification system. In-hospital cost was calculated using an activity-based costing methodology. Regression modelling was used to investigate the relationships among a priori selected perioperative variables, complications, and costs. The effect of complications on postoperative mortality was ascertained using time-dependent coefficients in a Cox proportional hazards regression model.<h4>Results</h4>135 (92%) patients experienced one or more postoperative complications. The medians of hospital cost for patients who experienced no complications and those who experienced complications were $42,796.3 (29,222.9-53,532.5) and $81,050.1 (49,614.8-122,533.6) respectively, p < 0.001. Hospital costs were strongly associated with complication severity: Clavien-Dindo grade II complications increased costs by 45.2% (p < 0.001, 95% CI 19.1%-76.6%), and Clavien-Dindo grade III to V complications increased costs by 107.5% (p < 0.001, 95% CI 52.4%-181.8%). Each additional count of complication and increase in Clavien-Dindo complication grade increased the risk of mortality 1.28-fold (RR = 1.28, p = 0.006, 95% CI 1.08-1.53) and 2.50-fold (RR = 2.50, p = 0.012 95% CI 1.23-5.07) respectively.<h4>Conclusions</h4>These findings demonstrate a high prevalence of complications following cystectomy and significant associated increases in hospital costs and mortality. Postoperative complications are a key target for cost-containment strategies.<h4>Trial registration</h4>Trial Registration: Australian New Zealand Clinical Trials Registry (ACTRN:12622000057785.