To analyse the epidemiological characteristics and related costs of herpes zoster in Taiwan, a nationally representative cohort of 1,000,000 individuals from the National Health Insurance register was followed up from 2000 to 2006 and their claims data analysed. Overall, 34,280 patients were diagnosed with zoster (incidence 4.89/1000 person-years) and 2944 patients (8.6%) developed post-herpetic neuralgia 3 months after the start of the zoster rash (incidence 0.42/1000 person-years). People with older age, diabetes, and immunocompromising conditions were at higher risk of developing zoster and post-herpetic neuralgia. The overall hospitalization rate for zoster was 16.1 cases per 100,000 person-years. The cost for each home care case and per hospitalized case were approximately €53.30 and €1224.70, respectively. Further research into the cost-effectiveness of zoster vaccine is needed.