We investigated the determinants of inpatient rehabilitation costs in the Department of Veterans Affairs (VA) and examined the relationship between length of stay (LOS) and discharge costs using data from VA and community rehabilitation hospitals. We estimated regression models to identify patient characteristics associated with specialized inpatient rehabilitation costs. VA data included 3,535 patients discharged from 63 facilities in fiscal year 2001. We compared VA costs to community rehabilitation hospitals using a sample from the Uniform Data System for Medical Rehabilitation of 190,112 patients discharged in 1999 from 697 facilities. LOS was a strong predictor of cost for VA and non-VA hospitals. Functional status, measured by Functional Independence Measure (FIM) scores at admission, was statistically significant but added little explanatory value after controlling for LOS. Although FIM scores were associated with LOS, FIM scores accounted for little variance in cost after controlling for LOS. These results are most applicable to researchers conducting cost-effectiveness analyses.