This study used Centers for Disease Control and Prevention methodology to analyze the costs of smoking-attributable mortality and morbidity within the Department of Defense (DoD) based on health care costs, characteristics of the beneficiary population, and disease characteristics. Direct health care costs attributed to smoking were estimated at $584 million. Smoking-attributable disease accounted for 16% of the deaths as well as approximately 10% of all hospital bed days and 1.5% of all active duty hospitalizations. Lost productivity among active duty personnel for hospitalization and smoke breaks was valued at $346 million. A significant portion of DoD health care resources is spent caring for smoking-attributable disease, which is preventable. This report reinforces the benefits possible from the new emphasis on wellness promotion within the DoD. Efforts are needed to prevent the initiation of smoking and encourage smoking cessation in order to reduce health care costs and increase the probability for long and healthy lives for DoD beneficiaries.