A statewide needs assessment followed by an institution-specific examination of care and charges for human immunodeficiency virus (HIV)-positive inmates in the Virginia Department of Corrections system was performed to: (1) delineate the cost of HIV care within a state corrections program, and (2) estimate the relative cost savings in the treatment of HIV-positive incarcerated persons. The Medical College of Virginia Hospitals was contracted to provide care to HIV-infected inmates in nine Virginia Department of Corrections facilities, where AIDS is the third leading cause of death. Primary health care is provided to known HIV-positive inmates through conventional outpatient clinical and telemedicine settings. All primary costs, including hospitalizations, were captured in this closed system. Since the introduction of this treatment program, there has been a sharp decrease in viral load levels among HIV-positive inmates, treatment compliance has improved, and there has been a reduction in all HIV-related morbidities except malignancies. Overall, care of HIV-positive inmates is improving and approaching standard levels of care.