Background: Both depression and cancer are economically burdensome. However, how depression affects the healthcare expenditures of elderly cancer patients from payers' and patients' perspectives is largely unknown. This study investigated whether depression resulted in higher healthcare expenditures among these patients from both payers' and patients' perspectives and identified health service use categories associated with increased expenditures. Methods: From the Medicare Current Beneficiary Survey (MCBS)-Medicare database, we identified breast, lung and prostate cancer patients aged 65 years and over who were newly diagnosed between 2007 and 2012. Presence of depression was based on self-reports from the surveys. We used generalized linear models (GLM) and two-part models to examine the impact of depression on healthcare expenditures during the first two years of cancer diagnosis controlling for a vast array of covariates. We stratified the analyses of total healthcare expenditures by healthcare services and payers. Results: Out of the 710 elderly breast, lung and prostate cancer patients in our study cohort, 128 (17.7%) reported depression. Individuals with depression had $11,454 higher total healthcare expenditures, $8213 higher medical provider expenditures and $405 higher other services expenditures compared to their counterparts without depression. Also, they were significantly more likely to have inpatient services. For payers, they incurred $8280 and $1270 higher expenditures from Medicare's and patients' perspectives, respectively. Conclusions: Elderly cancer patients with depression have significantly higher healthcare expenditures from both payers' and patients' perspectives and over different expenditure types. More research is needed in depression screening, diagnosis and treatment for this population.